What is the dominant strategy in the prisoner’s dilemma?
A) Each prisoner confesses because this is the rational action to pursue.
B) Do nothing in the hope that the other prisoner will also do nothing.
C) Do not confess because the other prisoner will most likely confess.
D) There is no dominant strategy.
All else equal, if job turnover has people leaving jobs and finding new jobs in the same
industry, this will
A) increase the demand for labor and the supply of labor.
B) increase the demand for labor and decrease the supply of labor.
C) decrease the supply of labor, but not change the demand for labor.
D) not change demand or supply in the labor market.
Consider a downward-sloping demand curve. When the price of an inferior good
increases, the income and substitution effects
A) work in the same direction to increase quantity demanded.
B) work in the same direction to decrease quantity demanded.
C) work in opposite directions and quantity demanded increases.
D) work in opposite directions and quantity demanded decreases.
Which of the following is a characteristic of a bond?
A) A bond represents a promise to repay a fixed amount of funds.
B) The face value or principal plus interest is repaid at a specified period of time.
C) The length of coupon payments is fixed by the stated maturity period.
D) All of these are characteristic of bonds.
The narrowest official definition of the money supply is
A) M1.
B) M2.
C) M3.
D) L.
Figure 14-4
Rainbow Writer (RW) is a
small online company selling a highly rated software package for printing color labels
directly onto CDs. The firm currently earns a profit of $2 million per year selling its
package exclusively on its Web site. Odeon, the producer of the most popular software
package for editing and burning CDs and DVDs, has expressed interest in bundling
Rainbow Writer’s product into its own package. Odeon expects that bundling would
further boost its sales and allow it to sell the new bundled product at a higher price, thus
raising its profits beyond its current profit of $12 million. Figure 14-4 shows the
decision tree for the Rainbow Writer-Odeon bargaining game.
What is the equilibrium outcome in this game and is this a subgame-perfect
equilibrium?
A) In the equilibrium, neither offer is accepted as Rainbow Writer holds out for a better
deal. The two rejection outcomes are subgame-perfect equilibria.
B) In the equilibrium, Odeon offers $40 per copy of the software package and is
accepted but this is not a subgame-perfect equilibrium.
C) Either offer of $30 or $40 per copy of the software package is accepted and these
two equilibria are subgame-perfect equilibria.
D) Either offer of $30 or $40 per copy of the software package is accepted but these are
not are subgame-perfect equilibria.
Owners of a corporation share in the profits of the firm
A) by selling any bonds or stocks owned and realizing a capital gain.
B) through coupon payments on that firm’s bonds.
C) through dividend payments on shares of that firm’s stock.
D) by raising the interest rate on bonds.
Table 2-5 Production choices for Nadia’s Neckware
Assume Nadia’s Neckties only produces ascots and bowties. Nadia faces ________
opportunity costs in the production of ascots and bowties.
A) increasing
B) decreasing
C) constant
D) negative
Which of the following is most important in explaining exchange rate fluctuations in
the short run?
A) relative price levels across countries
B) preferences for domestic and foreign goods
C) interest rates
D) relative rates of productivity growth across countries
Figure 16-7 The Lizard Lounge is well
known for its exotic cocktails. Figure 16-7 shows its estimated demand curve for
cocktails.
The owners of the Lizard Lounge are considering the following four pricing options:
a. A single price scheme where the cocktail price equals the monopoly price.
b. A single price scheme where the cocktail price equals the competitive price.
c. A two-part tariff: a monopoly price for cocktails and a cover charge that will generate
total revenue equal to the area X.
d. A two-part tariff: a competitive price for cocktails and a cover charge that will
generate total revenue equal to the area X + Y + Z. Under which scheme are the Lounge
customers better off?
A) scheme a
B) scheme b
C) scheme c
D) scheme d
When people became ________ concerned with the underlying value of their houses
and became ________ with the expectations of the prices of their houses increasing, a
housing bubble occurred.
A) less; less
B) less; more
C) more; less
D) more; more
Figure 2-4
Figure 2-4 shows various points on three Different production possibilities frontiers for
a nation.
Consider the following events:
a. a decrease in the unemployment rate
b. general technological advancement
c. an increase in consumer wealth Which of the events listed above could cause a
movement from V to W ?
A) a only
B) a and b only
C) b and c only
D) a, b, and c
What is productive efficiency?
A) a situation in which resources are allocated to their highest profit use
B) a situation in which resources are allocated such that goods can be produced at their
lowest possible average cost
C) a situation in which resources are allocated such the last unit of output produced
provides a marginal benefit to consumers equal to the marginal cost of producing it
D) a situation in which firms produce as much as possible
In what way does long-run equilibrium under monopolistic competition differ from
long-run equilibrium under perfect competition?
A) Firms in perfect competition achieve productive and allocative efficiency while
firms in monopolistic competition achieve neither allocative nor productive efficiency.
B) The only difference is that in a monopolistically competitive market there are many
brands to choose from while in a perfectly competitive market there is one standard
product.
C) Firms in perfect competition achieve productive efficiency while firms in
monopolistic competition achieve allocative efficiency.
D) Firms in perfect competition achieve allocative efficiency while firms in
monopolistic competition achieve brand efficiency.
Scenario 25-2 Imagine that Kristy deposits $10,000 of currency into her checking
account deposit at Bank A and that the required reserve ratio is 20%.
As a result of Kristy’s deposit, Bank A can make a maximum loan of
A) $2,000.
B) $8,000.
C) $10,000.
D) $50,000.
Which of the following statements about price elasticity of demand is false?
A) The value of the price elasticity of demand is the reciprocal of the value of the
demand curve’s slope.
B) If quantity demanded changes by a larger percentage than the percentage change in
price, demand is elastic.
C) The value of the price elasticity of demand along a downward-sloping demand curve
is always negative.
D) A linear downward-sloping demand curve has a varying price elasticity coefficient.
Companies in the sharing economy, such as Airbnb and Uber, have the potential to
increase consumer surplus and decrease deadweight loss. This would occur by
________ the equilibrium price in their market, and by doing so ________ efficiency.
A) lowering; decreasing
B) lowering; increasing
C) raising; decreasing
D) raising; increasing