Refer to the normal-form game of advertising shown below.Firm AFirm B??AdvertiseDo Not Advertise?Advertise$0,$0$175,$10?Do Not Advertise$10,$175$125,$125Suppose there is a 10 percent chance that the advertising game depicted in Figure 10-17 will end next period. What is the present value to firm A of agreeing to the strategy {do not advertise, do not advertise}?
A. $237.50
B. $125
C. $1,250
D. None of the answers is correct.
Answer: C
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Two identical firms that share a market and produce a homogeneous good will find the Bertrand Oligopoly LEAST attractive because
A) Cartels generate the highest joint profit. B) a Cournot Oligopoly will generate more profit than a Bertrand Oligopoly. C) they want to avoid a price war that leads to profit erosion and P = MC. D) All of the above.
The amount that a hospital will be paid for treating a Medicare patient is determined
a. before the patient ever sees a physician. b. at the time of admission to the hospital. c. at the point when the diagnosis is made. d. after medical services are provided. e. after the hospital bill is reviewed by Medicare auditors.
When a monopolist is ________, it has equated marginal revenue and marginal cost.
A. breaking even B. producing efficiently C. maximizing its total revenue D. maximizing profits
The federal income tax is designed to
A. Shift the Lorenz curve inward. B. Decrease vertical equity. C. Raise the Gini coefficient. D. Shift the Lorenz curve outward.