What is game theory and what light does it shed on the issues faced by duopolists?
What will be an ideal response?
Game theory is a tool economists use to analyze the behavior of oligopolistic firms because game theory is a tool to study strategic behavior. Game theory shows that because these firms are interdependent, the decisions they make to promote their own self-interest can wind up harming all the firms. The dilemma faced by duopolists is illustrated using game theory: Firms looking to earn for themselves the maximum possible profit can wind up earning less profit than if they had behaved less self-interestedly and more cooperatively.
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Which of the following forms of money would best represent fiat money?
a) Silver quarters made prior to 1965. b) An hour-long golf lesson given in exchange for an hour of tutoring in economics. c) A $20 bill printed in 2015. d) A rare baseball card given to a landlord in place of rent.
Which of the following would most likely cause a decrease in the current demand for a normal good? a. An increase in the price of the good
b. An increase in the expected future price of the good. c. A decrease in the price of a complement for the good. d. None of the above would be likely to cause a decrease in current demand for a normal good.