Under what circumstances do firms in a balanced oligopoly arrive at a Nash equilibrium outcome?
A Nash equilibrium is obtained at low prices and those prices are assured because both firms in a two-firm oligopoly have chosen a worst case scenario strategy. This strategy guarantees that a firm will still earn profit regardless what its rival does.
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Suppose the government purposely changes the economy's cyclically adjusted budget from a deficit of 3 percent of real GDP to a surplus of 1 percent of real GDP. The government is engaging in a(n):
A. expansionary fiscal policy. B. contractionary fiscal policy. C. neutral fiscal policy. D. high-interest-rate policy.
What serves as the supply curve for a perfectly competitive firm? Why is this supply curve upward-sloping, or why does it take a higher price to get a firm to produce and sell more output?
What will be an ideal response?