Refer to Figure 12.7. If Fred's profit in the second rectangle from the top were 1,600 instead of 1,500 then the path of the game would be:
A. Fred chooses a small quantity and Barney enters.
B. Fred chooses a large quantity and Barney stays out.
C. Fred chooses a large quantity and Barney enters.
D. Fred chooses a small quantity and Barney stays out.
Answer: B
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If each bank in the United States had to keep 100 percent of checkable deposits as reserves, each $1 the Fed injected into new reserves could increase the money supply by: a. $1
b. $2. c. $100. d. $5. e. a penny.
Many governments actively work to:
A. discourage foreign direct investment, in an effort to encourage locals to invest in their own economy. B. discourage foreign direct investment, in an effort to avoid "crowding out." C. attract foreign direct investment, hoping it will build up their capital stock when domestic savings aren't sufficient. D. attract foreign direct investment, so that when foreign companies invest in local firms, they can transfer human capital to local managers.