In the principal-agent problem, the principal is:
A. a person who entrusts someone with performing a task.
B. a person who carries out a task on someone else's behalf.
C. a person who is in charge of an educational system.
D. a person who is the source of the problem.
A. a person who entrusts someone with performing a task.
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The only two firms in a market are trying to decide what price to charge. The payoff matrix for this duopoly game is shown above. The payoffs are thousands of dollars of economic profit. In the above game, in the Nash equilibrium,
A) Firm A and Firm B are both making $40,000 in economic profit. B) Firm A and Firm B are both making $55,000 in economic profit. C) Firm A is making $60,000 and Firm B is making $55,000 in economic profit. D) Firm A and Firm B are both making $60,000 in economic profit. E) Firm A and Firm B are both making $35,000 in economic profit.
If the equilibrium price of good X is $4 and a price ceiling is imposed at $5, the result will be a(n):
A. depletion of inventories. B. shortage. C. surplus. D. equilibrium.