The above figure shows the payoff for two firms, A and B, that must each choose to sell either at a high or low price. Determine the dominant strategies for each firm (if any) and the Nash equilibria (if any)
What will be an ideal response?
For both firms the dominant strategy is to price low. Thus, the Nash equilibrium is for both firms A and B to price their product low. Note that the total profit is less than if they had both priced the product at a high price.
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Which of the following is NOT included in real GDP?
A) production of services, such as the services of hair dressers B) production of goods that last less than a year, such as production of hot dogs C) production that takes place in the underground economy D) production of goods that last more than a year, such as a pair of roller blades
For a perfectly competitive firm
A) price is greater than marginal revenue. B) price equals marginal revenue. C) price is less than marginal revenue. D) there is no relationship between price and marginal revenue.