Which statement is true if the monopolist can observe the consumer's type in the nonlinear-pricing application?
a. The monopolist supplies the consumer with as much of the good as if it were competitively priced.
b. The monopolist's profit approaches the upper bound from the simple linear pricing problem.
c. The monopolist extracts all of the surplus from the low type but not the high type.
d. The monopolist extracts all of the surplus from the high type but not the low type.
a
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A major problem in developing an activist policy is
A) uncertainty about the magnitude of the dynamic multiplier. B) uncertainty about the length and variability of policy lags. C) uncertainty about the costs of various policies. D) All of the above are correct.
Reaching a Nash equilibrium means that:
A. the outcome will be positive-positive. B. a cooperative equilibrium has been reached. C. the players have reached a stable outcome where neither would wish to change his strategy once he finds out what the other player is doing. D. the players have failed to reach a stable outcome because one player will always wish to change his strategy once he finds out what the other player is doing.