A growing number of cigar manufacturers in the Caribbean and Central America have begun producing and exporting cigars to the U.S. market. How has this affected the equilibrium price and quantity of cigars?
What will be an ideal response?
The supply curve for cigars shifted to the right resulting in a lower equilibrium price and higher equilibrium quantity.
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The Prisoners' Dilemma is so named because
a. the Nash equilibrium is one of the worst outcomes for the players. b. the game has no Nash equilibrium. c. the game is zero-sum. d. players end up earning a lighter sentence than the prosecutor would like.
One way the government can enhance efficiency through the management of common resources is by:
A. setting quotas for the good. B. banning the good. C. government provision of the good. D. All of these can be effective and efficiency-enhancing solutions.
Which of the following policy obstacles could occur because it is difficult to know how market participants will respond to specific policies?
A. Design problems. B. Goal conflicts. C. Implementation problems. D. Measurement problems.
Figure 8.4 depicts demand and costs for a monopolistically competitive firm. If the firm's demand curve shifts to the left as more firms enter the market:
A. the firm's average cost will be higher at the new profit-maximizing output level. B. the firm's average cost will be lower at the new profit-maximizing output level. C. the firm's average cost will remain the same at the new profit-maximizing output level. D. There is not sufficient information.