Which of the following is an example of an economic trade-off that a firm has to make?
A) whether it is cheaper to produce with more machines or with more workers
B) deciding why consumers want its products
C) whether or not consumers will buy its products
D) deciding what profit margin it desires for its products
Answer: A
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The above figure illustrates the case of a monopsony in the labor market. If the current wage paid is W1 and new wage legislation is passed that increases the minimum wage in this market to W2, the firm will
A) hire less labor at the higher wage and, according to the law of demand, moving from point D to B. B) hire the same amount of labor as before the law was passed because it cannot adjust to wage changes. C) hire more labor, moving from point C to B. D) pay a higher wage, moving from point C to A.
Refer to Table 14-3. Which of the following statements is true?
A) The Nash equilibrium is a noncooperative, dominant strategy equilibrium. B) The Nash equilibrium is a cooperative equilibrium. C) There is no Nash equilibrium in this game because each party pursues its dominant strategy. D) The Nash equilibrium is a collusive equilibrium.