Answer the following statement(s) true (T) or false (F)
1. If either player is receiving his maximum payoff, then that outcome is Pareto optimal.
2. An outcome that is Pareto optimal is preferred by both players to all other possible outcomes.
3. A Nash equilibrium need not be Pareto optimal, and a Pareto-optimal outcome need not be a Nash equilibrium.
4. In the Prisoners' Dilemma game, the only outcome that is not Pareto optimal is also the game's only Nash equilibrium.
5. When a game is played sequentially, the first player will have an advantage over the second player.
1. True
2. False
3. True
4. True
5. False
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The figure below shows the market for shoes in a small importing country. Dd and Sd are the domestic demand and supply curves of shoes, respectively.
The production effect of the tariff on shoes is measured by the area
A. a. B. b. C. c. D. (a + b).
The imposition of an excise tax on a service will _____ the supply of that service.
Fill in the blank(s) with the appropriate word(s).