The assumption that rival firms will match a firm's price decreases but not its price increases is a basic feature of:
A) model of limit pricing.
B) the kinked demand curve model.
C) the predatory pricing model.
D) cartel theory.
B
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A decision tree is used when modeling:
A. a prisoner's dilemma. B. simultaneous decisions. C. games in which timing matters. D. any type of game.
Suppose the accompanying figure shows the demand curve, marginal revenue curve and marginal cost curve for a monopolist.
At this monopolist's profit-maximizing level of output, deadweight loss equals ________.
A. $2,000 B. $1,000 C. $6,000 D. $4,000
In moving along a given budget line:
A. the prices of both products and money income are assumed to be constant. B. each point on the line will be equally satisfactory to consumers. C. money income varies, but the prices of the two goods are constant. D. the prices of both products are assumed to vary, but money income is constant.
Three-wheel cars made in North Edsel are sold for 5000 pounds. Four-wheel cars made in South Edsel are sold for 10,000 marks. The real exchange rate between North and South Edsel is four three-wheel cars for three four-wheel cars. The nominal exchange rate between the two countries is
A. 0.50 marks/pound. B. 1.50 marks/pound. C. 0.66 marks/pound. D. 2.00 marks/pound.