Taxes add to and transfers subtract from the flow of income and spending

The only two firms in a market are trying to decide what price to charge. The payoff matrix for this duopoly game is shown above. The payoffs are thousands of dollars of economic profit

In the Nash equilibrium, Firm A will set a price of ________ and Firm B will set a price of ________. A) $10; $20 B) $20; $10 C) $10; $10 D) $20; $20 E) $20; something, but more information is needed to determine Firm B's price

The rationing function of prices means that

A) government is responsible for setting the prices of basic foods. B) all goods and services are produced by large firms. C) businesses determine what goods consumers should purchase. D) buyers and sellers synchronize their decisions through the price system.