Refer to the payoff matrix. Suppose that Alpha and Beta agree that they will both pursue a high-price strategy. If Beta then cheats on the agreement in order to increase profits, which of the following is true?
A. If this is a repeated game, Alpha can be expected to pursue a low-price strategy in future games.
B. If this is a one-time game, a Nash equilibrium will result.
C. A Nash equilibrium cannot be reached through repeated playing of this game.
D. The game is a negative-sum game.
A. If this is a repeated game, Alpha can be expected to pursue a low-price strategy in future games.
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Beer and wine were difficult to find during the prohibition on alcohol, but whisky and gin were plentiful. Why?
A) Beer and wine were illegal; whisky and gin weren't. B) The drinking public only wanted whisky and gin. C) Criminals found it much more efficient to produce liquor. D) Police were willing to overlook production and consumption of whisky and gin because they believed liquor was less dangerous than beer and wine. E) Government officials were interested in seeing what would happen to rate of alcohol poisoning in the United States.
Profit maximization implies that firms will want to ________
A) accumulate capital while the MPK is greater than the real wage B) accumulate capital while the MPK is greater than the rental price of capital C) accumulate labor while the MPK is greater than the rental price of capital D) accumulate labor while the MPK is greater than the real wage E) none of the above