Author Question: Dell and Gateway must decide whether to lower their prices, based on the potential economic profits ... (Read 55 times)

D2AR0N · **on:** Jun 29, 2018

Dell and Gateway must decide whether to lower their prices, based on the potential economic profits shown in the payoff matrix above. (The profits are in millions of dollars).

If the firms collude and don't cheat, Dell's profit is ________ million and Gateway's profit is ________ million. A) 10; 10
B) 15; 15
C) 5; 20
D) 20; 5

Question 2

In the market for books, initially there are no taxes on books. Books are normal goods. The government introduces a tax of 4 a book and, at the same time, people's income fall by 4,000 a year.

Following these two changes, the equilibrium quantity of books A) decreases.
B) increases.
C) remains unchanged.
D) either increases or decreases. We cannot say which.