True/False/Uncertain. For each question, answer “True” or “False” or “Uncertain” and explain your answer. (1) In...
True/False/Uncertain. For each question, answer “True” or “False” or “Uncertain” and explain your answer.
(1) In any game between two firms that is repeated only once, the outcome will be perfect competition (P=MC).
(2) Suppose that regulators decide to increase the gasoline tax by 25 cents per gallon to combat global warming. Then consumers will pay substantially more for every gallon of gas they purchase.
Homework Answers
a) "Fasle"
If the game is repeated only once then in that case the output wil not be perfct competition but both the firm will try to maximise their profit and end up getting a lowest outcome that will casue a wastage.
b) "True"
As the demand for the gasoline is more inelastic then the increased price will casue an excess burden on the consumer. Hte supplier will shift it all to the consuemrs.
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