What conclusions can be drawn from the game theory view of oligopoly?
What will be an ideal response?
There are three basic conclusions that can be drawn. First, firms in an monopolistic industry are “mutually interdependent” and must consider the actions of rivals when they make pricing decisions. Second, oligopoly often leads to overt or covert collusion among the firms to fix prices or to coordinate pricing because competition often results in lower prices and profits. Collusion can help maintain higher prices and profits. Third, collusion creates incentives for firms to cheat on collusive agreements because higher profits can be made if a firm can successfully cheat on an agreement while the other firms maintain their prices.
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Is the image of the typical American worker as a blue-collar worker true? Substantiate your answer with facts.
What will be an ideal response?
An increase in the supply of labor will ________ real wages and ________ employment
A) increase; increase B) increase; decrease C) decrease; increase D) decrease; decrease
Bill's utility function takes the form U(I) = exp(I) where I is Bill's income. Based on this utility function, we can see that Bill is:
A) risk averse B) risk neutral C) risk loving D) He can exhibit two or more of these risk behaviors under this utility function.
Lower real interest rates
A. tend to shift the consumption function upward. B. have no significant effect on consumption. C. tend to shift the consumption function downward. D. tend to move the consumer upward along the consumption function.