In game theory, a strategy
A) is useless, because firms are subject to bounded rationality.
B) is useful in static games, but not in dynamic games.
C) defines the specific actions a firm will make.
D) determines the payoff matrix of the game.
C
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Raul borrowed $1,000 from Marta for a year and agreed to repay her $1,050 at the end of the year. If the inflation rate was 3 percent, which of the following is the real rate of interest Marta received?
a. 10 percent b. 5 percent c. 3 percent d. 2 percent e. ?2 percent
Refer to the table below. The perfectly competitive firm has a random demand with a 50 percent chance of being $5 and a 50 percent chance of being $7. What quantity should the firm produce to maximize its expected profit?
The above table summarizes the marginal cost of production at various quantity levels for a perfectly competitive firm.
A) 110
B) 120
C) 100
D) 130