Macroeconomics is mainly concerned with two topics. What are these two topics and how are they related to each other?
What will be an ideal response?
Macroeconomics is concerned with long-run economic growth and short-run changes in the levels of employment and output. These short-run fluctuations are known as business cycles. Long-run economic growth and business cycles are related to each other because they happen simultaneously. We tend to observe, however, positive growth trends in the long run, but a great deal of variability in the short run.
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Tobacco companies did not resist the advertising ban instituted in 1970 because they actually increased profits by not being allowed to advertise
This ban forced these companies to abandon their dominant strategy of advertising and wind up at a cooperative outcome of not advertising. Prior to the ban, the tobacco companies were involved in playing A) a pure coordination game. B) a prisoner's dilemma game. C) an assurance game. D) a battle of the sexes game.
Suppose in the ice-cream market with 10 firms, the elasticity of market demand is -1, and each firm has a constant marginal cost at $2. The Nash-Cournot equilibrium price is
A) $2. B) $2.2. C) $2.4. D) $2.5.