Refer to the data provided in Table 17.5 below to answer the following question(s). The table shows the relationship between income and utility for Lucy.
Table 17.5 IncomeTotal Utility $00$10,00010$20,00020$30,00030$40,00040Refer to Table 17.5. Lucy earns $20,000 annually. She has the opportunity to bet her entire salary on the upcoming super bowl. If Lucy takes the bet, she will pick the Packers. She believes that the Packers have a 50-50 chance of winning the game. If the Packers win, then Lucy will win $38,000. However, if they lose she loses her entire salary ($0). Will Lucy take the bet?
A. yes
B. no
C. maybe
D. indeterminate from the given information
Answer: B
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Which of the following can always be used to determine the outcome when there are multiple Nash equilibria?
A) the Pareto Criterion B) cheap talk C) Both A and B D) None of the above.
Vertical relationships can increase profits through
a. preventing firms from evading regulation b. creating a double-markup problem c. making the incentives of manufacturers and retailers unaligned d. facilitating price discrimination
Because firms in an oligopoly are interdependent, they attempt to maximize revenues rather than profits
a. True b. False
Assume a price floor is imposed in the wheat market at the equilibrium price and that a price ceiling is imposed in the gasoline market at the equilibrium price. An increase in supply in both the wheat and gasoline markets will create: a. surpluses in both the wheat and gasoline markets
b. shortages in both the wheat and gasoline markets. c. a surplus in the wheat market and an increase the quantity of gasoline traded. d. a surplus in the wheat market and a shortage in the gasoline market.