Explain the essential difference between games in which moves are simultaneous and those in which moves are sequential. What will be an ideal response? ANSWER In a simultaneous-move game, each player has to decide what the other player’s strategy will be and then act based on that strategy. Thus, one player cannot manipulate the […]
A consumer is in equilibrium, that is, a consumer is maximizing her utility when marginal utility and price are equal for each of the goods the consumer purchases. Indicate whether the statement is true or false ANSWER FALSE
Imports are: A) positively related to income in the rest of the world and currency appreciation. B) positively related to income in the rest of the world and currency depreciation. C) positively related to domestic income and currency appreciation. D) positively related to domestic income and currency depreciation. ANSWER C
The available data strongly suggest that, as the “needs” argument would suggest, the demand for health care is virtually perfectly inelastic. Indicate whether the statement is true or false ANSWER FALSE
What is the significance of the mutual interdependence among the firms in an oligopolistic market? What will be an ideal response? ANSWER The assertion that the firms in an oligopolistic market are mutually interdependent means that the decisions of one firm have an effect on the decisions of the other firms in the market. […]
Assume an auto firm’s factories are capable of producing both large and small cars and are operating at full capacity. Assume the price of large cars increases due to a shift in consumers’ preferences toward large cars and away from smaller cars. What would reasonably be expected to happen to the equilibrium price and quantity […]
Net exports are: A) negatively related to domestic income, positively related to income in the rest of the world, and positively related to currency appreciation. B) negatively related to domestic income, positively related to income in the rest of the world, and positively related to currency depreciation. C) positively related to domestic income, positively related […]
Increase in the real interest rate will ________ the expenditure curve: A) decrease. B) increase. C) not change. D) none of the above. ANSWER A
The income elasticity of demand for health care is generally less than 1, indicating consumers consider these services to be luxuries. Indicate whether the statement is true or false ANSWER FALSE
Failure to account for the increased transportation costs that would result from building fewer and more centrally located production facilities could result in firm managers selecting a scale of operation that is larger than the optimum. Indicate whether the statement is true or false ANSWER TRUE
