A coordination problem arises whenever there:
A. are multiple Nash equilibria.
B. is a unique Nash equilibrium but it is not very desirable.
C. are no dominant strategies for both players.
D. is no Nash equilibrium in a game.
Answer: A
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Figure 5-5 shows a consumer budget line for french fries and hamburgers. The price of an order of fries is $2. This implies that the price of a burger is
A. $1. B. $2. C. $4. D. $8.
Adverse selection is a situation in which one party to a transaction takes advantage of knowing more than the other party to the transaction
Indicate whether the statement is true or false
The price of pie increases. Some people who purchased pie before the price increase no longer purchase pie. This is
A) a positive externality. B) a negative externality. C) a positive externality for some consumers and a negative externality for others. D) not an externality.
A monopolist determines the profit-maximizing output
A) at the point at which TR = TC. B) at the point at which MR = MC. C) at any point it wants because it is the only producer of the product. D) at the point at which TR is maximum.