Unlike indifference curves, isoquants can intersect
Indicate whether the statement is true or false
False. By the same logic as with indifference curves, the intersection implies the same level of output. Since output increases as one moves toward the northeast on the isoquant map, moving from the intersection one isoquant shows higher output and the other shows lower. This is contradictory.
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Refer to Figure 14-7. Uniguest, Inc is a company that provides PCs with internet access and touch-sensitive screens to hotels
Suppose the Hard Rock Hotel and Casino in Las Vegas informs Uniguest that it is considering installing these systems in its hotel rooms. The Hard Rock expects to be able to charge higher prices for these rooms if it installs Uniguest's systems in its rooms. The two companies begin bargaining over what price the Hard Rock will pay Uniguest for its systems, and the decision tree shown above illustrates this bargaining game. Note that the profit figures listed in the decision tree are additional profits for the Hard Rock and total profits for Uniguest. a. Suppose the Hard Rock offers Uniguest $1,200 per system. Will Uniguest accept or reject this offer? Why? b. Suppose the Hard Rock offers Uniguest $800 per system. Will Uniguest accept or reject this offer? Why? c. Suppose Uniguest attempts to obtain a favorable outcome from the bargaining by telling the Hard Rock it will reject an $800-per-system offer. If the Hard Rock does not believe the threat is credible, what will it do? Why? What will Uniguest do? Why? d. Is there a subgame-perfect equilibrium in this situation? Explain.
Suppose hypothetically that you buy a lot of food such as tofu, veggie burgers, and organic fruit that are not included in the market basket used to compute the CPI. In addition, suppose that all of these goods have become cheaper over the last year, while the overall CPI has increased by 6 percent. Then which of the following is true? a. The CPI will understate the negative impact of inflation
on your purchasing power and standard of living. b. The CPI will still accurately state the negative impact of inflation on your purchasing power and standard of living. c. The CPI will overstate the negative impact of inflation on your purchasing power and standard of living. d. None of the answers above are correct.