Refer to Figure 7-21. Which area represents total surplus in the market when the price is P1?

Identify the correct statement

a. As domestic income rises, imports rise and net exports fall. b. As foreign income rises, net exports fall. c. As domestic income falls, imports rise and net exports fall. d. As domestic income rises, imports fall and net exports rise. e. As foreign income falls, net exports rise.

Answer the following statements true (T) or false (F)

1) When each firm uses the strategy that maximizes its profit, it is possible for the equilibrium result to yield the worst possible joint equilibrium for all firms. 2) If Best Lights and Bright Lights are competing in a duopoly, Best Lights' profit depends solely on the decisions of its managers. 3) Every dominant strategy equilibrium is a Nash equilibrium, but not every Nash equilibrium is a dominant strategy equilibrium. 4) Cheap talk helps firms cooperate and earn higher profit. 5) If two players are in a finitely repeated game and both players know the final period, cooperation is not possible due to the end-period problem.