Describe an arms race in economic terms. Is it rational for countries to participate in an arms race? What will be an ideal response? ANSWER An arms race is a prisoners’ dilemma where it is in each participant’s best interest to participate in an arms race and try to win the race. If the […]
Date: September 9th, 2020
The true cost of any product purchased by the military is its purchase price. a. True b. False ANSWER b
Date: September 9th, 2020
In the Stackelberg model, the leader has a first-mover advantage because it A) has lower costs than the follower. B) commits to producing a larger quantity. C) reacts to the follower’s decision. D) differentiates its output. ANSWER B
Date: September 9th, 2020
Many people tend to buy multiple cars from the same manufacturer because A) doing so reduces the asymmetric information problem; consumers have better knowledge of quality. B) doing so reduces the asymmetric information problem; consumers have better knowledge of prices. C) doing so doesn’t change the asymmetric information problem but consumers have more information. D) […]
Date: September 9th, 2020
Describe how the risk premium for a person with a convex utility function is determined. What will be an ideal response? ANSWER A person with a convex utility function is risk preferring. This person will not pay a premium to avoid risk. The risk premium is zero.
Date: September 9th, 2020
If only one firm operates in a market, and a potential entrant is blockaded from entering the market, then the incumbent firm must A) have acted to prevent entry. B) be pricing where price equals marginal cost. C) be a natural monopoly. D) be the Stackelberg leader. ANSWER C
Date: September 9th, 2020
A bureau’s total output is decided at the same time as its budget just as in the private sector. a. True b. False ANSWER b
Date: September 9th, 2020
What is the difference between marginal and average tax rates? Under what marginal and average tax rate conditions would an income tax be progressive? What will be an ideal response? ANSWER Marginal tax rates are the percentage of any additional income that will have to be paid in tax while average tax rates are […]
Date: September 9th, 2020
For small armies, a volunteer army would be less costly. a. True b. False ANSWER a
Date: September 9th, 2020
If the price of a pizza were to increase to $50, many people would give up eating pizza while others would continue to eat it. This would indicate A) those who are buying pizza value it at least $50 per pizza. B) those who are not buying pizza value it more than $50 per pizza. […]
Date: September 9th, 2020
