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The Cournot model of duopoly assumes that each firm chooses its output level assuming that:
AThe rival firm keeps its quantity output constant
BThe rival firm keeps its price constant
CThe rival firm will match price cuts
DFirms collude explicitly
The Bertrand model of oligopoly differs from Cournot because firms compete primarily on:
APrice levels
BAdvertising expenditures
CQuantity output levels
DProduct quality differences
Which concept refers to a state where no individual actor can be made better off without making at least one individual worse off?
ANash Equilibrium
BKaldor-Hicks Efficiency
CEdgeworth Box Balance
DPareto Efficiency (Pareto Optimality)
The Compensation Principle in welfare economics was formulated by:
AVilfredo Pareto
BNicholas Kaldor and John Hicks
CKenneth Arrow
DPaul Samuelson
Arrow’s Impossibility Theorem demonstrates that no social choice mechanism can convert individual preferences into a consistent social ranking without violating:
AFiscal budget constraints
BDemocratic principles (such as non-dictatorship and Pareto efficiency)
CMonetary policy neutrality
DThe law of diminishing marginal returns
The Moral Hazard problem in economics arises primarily:
AAfter a contract is signed due to unobservable risky behavior (hidden action)
BWhen governments grant export subsidies
CBefore a contract is signed due to hidden information
DWhen prices are fixed below market equilibrium
Adverse Selection in insurance markets occurs primarily due to:
AHidden information prior to signing a contract
BGovernment interest rate caps
CHigh transaction fees
DHidden actions after purchase
The difference between Gross National Product (GNP) and Net National Product (NNP) is:
ANet indirect taxes
BDepreciation allowance
CSubsidies
DNet factor income from abroad
Personal Disposable Income is calculated by subtracting which item from Personal Income?
AIndirect business taxes
BPersonal direct taxes and non-tax payments
CUndistributed corporate profits
DSocial security contributions
According to Keynes, the precautionary motive for holding money depends primarily on:
AIncome levels
BStock market performance
CInterest rates
DInflation projections