The above figure shows the payoff matrix for two firms, A and B, selecting an advertising budget. The firms must choose between a high advertising budget and a low advertising budget. A Nash equilibrium
A) occurs when both firms select a high advertising budget.
B) exists at any of the four possible strategy combinations because there is never an incentive to change strategy.
C) is for both firms to choose the low advertising budget because this yields the highest joint profit.
D) does not exist because firm A does not have a dominant strategy.
A
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Which of the following statements is true?
A) Both efficiency wages and minimum wages increase unemployment. B) Efficiency wages increase unemployment while minimum wages help reduce unemployment. C) Both efficiency wages and minimum wages help reduce unemployment. D) Efficiency wages help reduce unemployment while minimum wages increase unemployment.
If real GDP grows by 3 percent, the velocity of circulation does not change, and the quantity of money grows by 3 percent, then in the long run the inflation rate is
A) 0 percent. B) 6 percent. C) -3 percent. D) -6 percent. E) 3 percent.