What is a household's choice set or opportunity set?
What will be an ideal response?
A choice set is the set of options that is defined and limited by a budget constraint.
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Ann Taylor and Gap are two clothing companies that must decide on the leading color palette for next season. Their sales depend on the choice of color they make as well as the choice their competitor makes
Their sales are summarized in the payoff matrix above. Using the payoff matrix A) the only Nash Equilibrium is for both companies to choose pink. B) the only Nash Equilibrium is for both companies to choose orange. C) the Nash Equilibrium is for one company to choose pink while the other company chooses orange. D) there are two Nash Equilibria: either both companies choose pink or both choose orange.
Which of the following can create demand-pull inflation?
a. Higher labor costs b. Recessions and depressions c. Sharply rising oil prices d. Excessive aggregate spending