Refer to the scenario above. Which of the following will be true if Harry is known to be trustworthy?
A) The outcome will be a Nash equilibrium.
B) The equilibrium outcome will be socially inefficient.
C) Unique equilibrium will not occur.
D) Multiple equilibria will occur.
A
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The menu cost theory states that
A) wages depend on the productivity of workers. B) economic agents quickly learn the likely responses of the Fed to changes in unemployment. C) the economy is characterized by perfect competition. D) prices are not fully flexible because it is costly for firms to change prices every time there is a demand change.
Car A gets 12 miles per gallon. Car B gets 30 miles per gallon. Which is the most economically efficient car?
A) Car A B) Car B C) They are equal in their economic efficiency. D) It is impossible to determine without more information.