Suppose two firms are trying to decide how much to budget for research and development. Once a new discovery is made, each firm benefits regardless of which firm developed the innovation. In this R&D game of chicken, the Nash equilibrium will be that
A) either both firms conduct the R&D or neither firm conducts the R&D.
B) only one firm conducts the R&D but which firm conducts the R&D cannot be determined.
C) both firms conduct the R&D.
D) neither firm conducts the R&D.
B
Economics
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Which of the following is an example of an automatic stabilizer?
a. Decrease in tax rates by Congress in times of unemployment b. Decrease in tax rates by Congress in times of inflation c. Increase in government defense spending during war d. Increase in unemployment compensation during recession e. Decrease in welfare programs during inflation
Economics
Asymmetric information in a transaction can result in:
A. moral hazard. B. adverse selection. C. a lemons problem. D. All of these statements are true.
Economics