How does the use of credible threats or empty threats by firms affect outcomes and the Nash equilibrium in one-period games?
What will be an ideal response?
A credible threat is a statement of coercion that is believable by the other firm. An empty threat is a threat that is not believable by the threatened firm. If there is a credible threat in a single-period and simultaneous game, then it can cause the firms to abandon the Nash equilibrium to enjoy larger profits. It is, however, difficult to enforce such a threat and if it is not credible, it is an empty threat. Empty threats result in Nash equilibriums that do not change.
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The business cycle is usually illustrated using movements in
A) the inflation rate. B) labor productivity. C) real GDP. D) the size of the labor force.
For most goods and most people, marginal utility probably: a. continues to increase as larger quantities are purchased. b. declines as consumption increases
c. plummets after the first few units but soon begins to rise. d. is negative after the first unit of a good is purchased.