A prisoner's dilemma is a situation in which
a. a change in marginal cost may not lead to a change in price
b. a firm's competitors follow a price increase but ignore a price decrease
c. oligopolists behave irrationally
d. oligopolists attempt to maximize sales rather than profits
e. an oligopolists demand curve may become perfectly inelastic
A
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If the Fed announced a policy to reduce inflation and people found it credible, the short-run Phillips curve would shift
a. right and the sacrifice ratio would fall. b. right and the sacrifice ratio would rise. c. left and the sacrifice ratio would fall. d. left and the sacrifice ratio would rise.
Which of the following is a TRUE statement?
A) Externalities cannot be solved by market solutions and always require government action. B) Externalities would never be a problem if people were willing to comply with government regulations. C) Voluntary agreements can solve externality situations by making the party incurring the costs bear the costs of his or her actions. D) Externalities can only be handled by government regulation and emission taxes cannot work effectively.