Refer to Table 14-9. Saudi Arabia and Yemen must decide how much oil to produce. Since the demand for oil is inelastic, relatively low production rates drive up prices and profits
Saudi Arabia, the world's largest and lowest-cost producer, is able to influence market price; it has an incentive to keep output low. Yemen, on the other hand, is a relatively high-cost producer with much smaller reserves. Use the payoff matrix in Table 14-9 to answer the following questions.
a. What is the dominant strategy for Saudi Arabia?
b. What is the dominant strategy for Yemen?
c. What is the Nash equilibrium?
a. Saudi Arabia's dominant strategy is to produce a low output
b. Yemen's dominant strategy is to produce a high output.
c. The Nash equilibrium has Saudi Arabia producing a low output and Yemen a high output.
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At each of the three points in the following graph, indicate whether planned aggregate expenditure is greater than, equal to, or less than GDP?
What will be an ideal response?
On a bank's balance sheet, liabilities are
A) the uses of acquired assets. B) the sources of acquired funds. C) all those items of value owned by the bank. D) by definition equal to the bank's assets.