Question

In: Economics

Over the past several years, the demand for phone operators has fallen dramatically. Which of the...

Over the past several years, the demand for phone operators has fallen dramatically. Which of the following would be a reason for this development?

		an increase in the number of automated answering services
		a decrease in the technology associated with phone equipment
		an increase in the supply of phone operators
		higher prices for long-distance service

Question 25

Figure: Payoff Matrix II for Jake and Zoe:

		Zoe
Jake	Competitive Strategy	High Price	Low Price
	High Price	Jake earns=$1,000; Zoe earns = $1,000	Jake earns= $200; Zoe earns = $1,500
	Low Price	Jake earns= $1,500; Zoe earns = $200	Jake earns= $800; Zoe earns = $800

Payoff Matrix II for Jake and Zoe refers to two producers of slushes in their tourist town. Each has two strategies available to it: a high price and a low price. The figure shows the profit per week earned by their two firms. The Nash Equilibrium in the figure is reached when:

		both firms charge a high price
		both firms charge a low price
		Jake charges a high price and Zoe charges a low price
		Zoe charges a high price and Jake charges a low price

The short-run supply curve for a perfectly competitive firm is:

		the average total cost curve above the break-even price
		the average variable cost curve above the shut-down price
		the marginal cost curve above the break-even price
		the marginal cost curve above the shut-down price

Which of the following is more likely to increase your own labor productivity?

		more training and education investment paid by the firm
		an increase in the minimum wage paid by the firm
		the creation of a labor union with the consent of the firm
		a law that prohibits firms to layoff

Expert Solution

Answer : 1) The answer is option A.

Automated answering services are increased over last several years. As automated answering services are better than phone operators. Hence the demand for phone operators has decreased over last several years. Therefore, option A is correct.

25) The answer is option B.

Jake will choose Low price strategy because by choosing this strategy Jake will get higher earning. After choosing Jake's strategy Zoe will choose the strategy of Low price to get higher earning. As a result, here the Nash equilibrium will occur when both chooses Low price strategy. Therefore, option B is correct.

3) The answer is option D.

For competitive firm the supply curve is that part of marginal cost curve which lies above the average variable cost curve. When price is equal to average variable cost then the price is called shut-down price. So, above the shut-down price the marginal cost curve is the supply curve. Therefore, option D is correct.

4) The answer is option A.

When firm invest more on training and education for labors then the labor productivity increase. Therefore, option A is correct.

Rahul Sunny answered 1 year ago

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