Which of the following is true of a payoff matrix?
A) It is the representation of only the best response of each player.
B) It takes into account all relevant costs and benefits associated with each action of the players.
C) It shows the payment made to each factor of production for the production of a good.
D) It does not represent all the costs and benefits associated with the choices of the players.
B
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The conditions in which vertical relationships can enhance a firm's ability to price discriminate include
a. the manufacturer's product is of value to multiple types of customers b. the costs of arbitraging the price difference across markets is large c. the manufacturer acquires the distributer in the higher priced market d. competition provides little ability for the manufacturer to price above marginal cost
Suppose a consumer's utility function is U(F0, F1) = F00.5F10.5, where F0 represents food consumed this year and F1 represents food consumed next year. For that utility function, the marginal utility of food consumed this year is 0.5 × (F1/F0)0.5 and the marginal utility of food consumed next year is 0.5 × (F0/F1)0.5. Suppose the consumer earns $100 this year and nothing in the next, food costs $1 per unit in both years, and the interest rate is 10%. How much food does she consume this year, and how much does consume tomorrow?
A. She consumes 45 units of food this year and 55 units of food next year. B. She consumes 50 units of food this year and 50 units of food next year. C. She consumes 55 units of food this year and 50 units of food next year. D. She consumes 50 units of food this year and 55 units of food next year.