Management and a labor union are bargaining over how much of a $50 surplus to give to the union. The $50 is divisible up to one cent. The players have one shot to reach an agreement. Management has the ability to announce what it wants first, and then the labor union can accept or reject the offer. Both players get zero if the total amounts asked for exceed $50. Which of the following is true?
A. ($25, $25) is a Nash equilibrium.
B. There are multiple Nash equilibria.
C. There are multiple Nash equilibria, and ($25, $25) is a Nash equilibrium.
D. A Nash equilibrium is also a perfect equilibrium.
Answer: C
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Figure 4.3 illustrates the demand for tacos. Assume tacos are an inferior good. An increase in income would bring about a movement from
A) point a to point b. B) point c to point b. C) D2 to D1. D) D0 to D1.
The labor force participation rate is calculated as the
A) labor force divided by the number of persons employed then multiplied by 100. B) number of persons unemployed divided by the labor force then multiplied by 100. C) labor force divided by the unemployment rate then multiplied by 100. D) labor force divided by the working age population then multiplied by 100.