Refer to the above payoff matrix for the profits (in $ millions) of two firms (A and B) and two pricing strategies (high and low). Which of the following is the outcome of the dominant strategy without cooperation?
A) Both firm A and firm B choose the high price.
B) Both firm A and firm B choose the low price.
C) Firm A chooses the low price while firm B chooses the high price.
D) Firm A chooses the high price while firm B chooses the low price.
B
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For which of the following is demand likely to be the most price elastic?
a. a good for which there are no close substitutes b. a good for which there are no easily-obtained substitutes c. a good with close substitutes that are difficult to obtain d. a good that is no longer being produced e. a good for which close substitutes are easily obtained
According to the classical approach, if planned savings increases,
a. the rate of interest will rise. b. the rate of interest will fall. c. planned investment will fall. d. planned consumption will increase.