Question

25.
When inflation falls unexpectedly in the short run real wages _____ and so firms will provide _____ jobs.

       
rise; more

       
fall; fewer

       
fall; more

       
rise; fewer

34.
Game theory can NOT be applied to analysing
       duopolies.
       individuals playing poker (a betting game).
       behaviour on Tinder.
       monopolies.

42.
If the price goes beneath the market equilibrium, there will be

       
a surplus of production.

       
a shortage of production.

       
Pareto efficiency.

       
excess supply.

Answer 1

25) ans) rise; fewer

explanation : When inflation rate falls this will make good cheaper and thus real wage seem to be more in short run atleast. We know through philips curve there is inverse relationship between employment and inflation. If inflation rate is falling , employment will also fall.

34) ans) Monopolies

Explanation: game theory can explain why monopolies exist but they cannot analyze monopolies. As monopolies are single firms. For game theory it needs to have two or more people and a strategy to formed. A monopoly do not make strategies consider others, may be monopolies exist cause of dominant strategies of monopolies but once it become monopoly further analysis cannot be explained.

35) ans) shortage of production

explanation: consider a demand and supply condition, whenever the price goes beneath demand and supply interaction point it refers to condition when demad is much more than the supply. This condition also noted as excess demand and this is the reason why prices are less than equailibrium.