A commitment problem exists when people cannot achieve their goals because:
A. they do not have the first-mover advantage in a sequential move game.
B. they cannot play their dominant strategy.
C. the payoff matrix is unknown.
D. they cannot make credible threats or promises.
Answer: D
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The aggregate supply curve indicates the:
A. relationship between prices and the aggregate quantity of goods and services purchased by consumers, investors, governments, and foreigners (net exports). B. relationship between prices and the natural rate of unemployment. C. relationship between the real wage rate and the quantity of labor supplied by households. D. quantity of goods and services producers will supply at different price levels.
Which of the following is not an example of a failure of market outcome?
A. A person with a gun offers you your life for your money. B. Emission of pollutants is producing acid rain and killing wildlife. C. Addicts continue to use heroin even though they would be better off without it. D. Income is not distributed in a way society wants.