Answer the next question based on the following payoff matrix for two oligopolistic firms in which the numbers indicate the profit in millions of dollars for each firm. Firm A? High PriceLow PriceFirm BHigh priceA = $250A = $325??B = $250B = $200?Low priceA = $200A = $175??B = $325B = $175Assume that firm B adopts a low-price strategy while firm A maintains a high-price strategy. Compared to the results from a high-price strategy for both firms, firm B will now
A. gain $50 million in profit and firm A will lose $75 million in profit.
B. gain $75 million in profit and firm A will lose $50 million in profit.
C. lose $75 million in profit and firm A will gain $50 million in profit.
D. gain $50 million in profit and firm A will lose $50 million in profit.
Answer: B
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If we assume only one factor (labor), we can demonstrate on the PPF the opportunity cost of producing less of one good and more of the other good by:
a. taking the sum of the marginal products of labor for the two goods. b. taking the difference of the marginal products of labor for the two goods. c. taking the ratio of the marginal products of labor for the two goods times -1. d. taking the average of the marginal products of labor for the two goods.
A capital gain occurs when the
A) coupon rate increases. B) current yield increases. C) price of an asset increases. D) yield to maturity increases.