Two firms are introducing an improved version of their toothpastes. They must decide whether or not to advertise their products. The table above gives the payoff matrix in terms of the economic profits they expect in each case
The payoffs are in terms of millions of dollars. a. What is the Nash equilibrium for the game? b. If they could cooperate, what strategy would they prefer? What would be the payoff?
a. The Nash equilibrium has each firm advertising and hence each firm receiving $100 million in economic profit because both decided to advertise.
b. If they could cooperate, they would both choose not to advertise. In this case, each would earn $140 million in economic profit.
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When interest rates fall in the United States (with the price level fixed), the value of the dollar ________, domestic goods become ________ expensive, and net exports ________
A) falls; less; fall B) falls; less; rise C) falls; more; fall D) rises; less; fall
Which of the following could the government do to decrease the costs of inflation without lowering the inflation rate?
a. Avoid unexpected changes in the inflation rate. b. Rewrite the tax laws so that nominal gains were taxed instead of real gains. c. Make policy that would discourage firms from issuing indexed bonds. d. All of the above are correct.
The asset demand for money is most closely related to money functioning as a:
A. unit of account. B. medium of exchange. C. store of value. D. measure of value.
If leisure is a normal good and the economy expands so that national income rises by 3% next year then theoretically what ought to happen to the amount of work that should take place?
What will be an ideal response?