If the players in the figure shown act in their own self-interest, then we know that Sarah will earn utility of:
This figure shows the payoffs involved when Sarah and Joe work on a school project together for a single grade. They both will enjoy a higher grade when more effort is put into the project, but they also get pleasure from goofing off and not working on the project. The payoffs can be thought of as the utility each would get from the effort they individually put forth and the grade they jointly receive.
A. 6.
B. 10.
C. 7.
D. 15.
C. 7.
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Why are changes in the output gap larger than changes in the unemployment gap? Why is the relationship expressed in Okun's law not affected by inflation or expected inflation?
What will be an ideal response?
How has the Bureau of Labor Statistics (BLS) changed the calculation of the CPI in order to take substitution bias into account?
What will be an ideal response?
The difference in the prices of a good in two countries creates opportunities for arbitrage: traders buy the good at a low price in one country and sell it at a higher price in the other. When the difference in the prices vanishes, and the world price is established in both countries, there is no scope for trade anymore because no trader will be willing to buy the good in one country and sell it in another. Discuss the validity of this statement.
What will be an ideal response?
Refer to the information provided in Figure 2.4 below to answer the question(s) that follow.
Figure 2.4According to Figure 2.4, a decrease in unemployment may be represented by the movement from
A. B to A. B. C to D. C. B to D. D. A to C.