When one firm uses the same strategy as the other firm used in the previous time period, this is known as a:
A. tit-for-tat strategy.
B. grim-trigger strategy.
C. dominant strategy.
D. predatory strategy.
Answer: A
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In a principal-agent problem, if the contract implies that the more risk-averse agent will bear less risk, we can say that this contract exhibits
A) efficiency in risk-bearing. B) risk sharing is not optimal because the less risk-averse (or risk-neutral) agent should bear none of the risk. C) risk sharing is not optimal because all risk should be transferred to the most risk-averse agent. D) risk sharing is not optimal because risk-neutral agents should face no risk.
The short-run supply curve of a perfectly competitive firm is: a. the average variable cost curve
b. the average total cost curve. c. the same as the demand curve. d. marginal cost above average variable cost.