Describe an arms race in economic terms. Is it rational for countries to participate in an arms race?
What will be an ideal response?
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 participants could agree to not participate, for example by signing treaties limiting military buildup, then both countries would be made better off. It is rational for countries to participate in an arms race even though it makes them worse off then they would be if they cooperated. That is because if they are lightly armed and their opponent is heavily armed and they get in a conflict they will suffer higher losses than if they were both armed and get in a conflict.
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What percentage of businesses are sole proprietorships?
What will be an ideal response?
The institutional production possibilities frontier illustrates the different combinations of goods that society can obtain given
A) the constraints of finite resources and the current state of technology. B) the price level. C) its institutional constraints. D) the natural rate of unemployment. E) the constraints of finite resources and the current state of technology and institutional constraints.