The statement that is true in the given scenario.
Answer to Problem 5CTQ
Option c is correct.
Explanation of Solution
Explanation for the correct option:
c.
In a financial system, efforts are taken to reduce the transaction cost, ensure liquidity and minimize financial risk which can be done by ensuring the efficiency of the financial market.
Therefore, option c is correct.
Explanation for incorrect options:
a.
A prisoner’s dilemma is a situation where an individual who is a decision maker has an incentive of selecting a way that can create a less-than-optimal outcome for an individual as a group. This situation does not apply to Firm X and Firm Y as they both are not in a situation
Therefore, option a is incorrect.
b.
The financial system helps in reducing transaction costs so that traders can purchase or sell financial assets more easily. Therefore, option b is incorrect.
d.
A diversified market is less risky than an undiversified market. Decreasing diversification will increase the market risk. Therefore, option d is incorrect.
e.
Ensuring liquidity is one of the tasks of the financial system. Therefore, option e is incorrect.
Payoff matrix and Nash equilibrium: Nash equilibrium refers to the outcome at which both players receive no incentive in changing their previous strategy. In a payoff matrix where there are two players, for a Nash equilibrium, the row which is selected should maximize the payoff for the row player and the column should also maximize the payoff of the column player.
Chapter 13R Solutions
Krugman's Economics For The Ap® Course
- You are the manager of a monopoly that sells a product to two groups of consumers in different parts of the country. Analysts at your firm have determined that group s elasticity of demand is while group s is Your marginal cost of producing the product is $ a Determine your optimal markups and prices under thirddegree price discrimination. b Identify the conditions under which thirddegree price discrimination enhances profits.arrow_forwardDon't used hand raiting and don't used Ai solutionarrow_forwardDemand and supply functionarrow_forward
- Not use ai pleasearrow_forwardThanks!arrow_forwardIf there is an oil shock, what will happen to the market for thick metal tables (they are very heavy)? Group of answer choices P decreases and Q increases. P decreases and Q decreases. P increases and Q decreases. P increases and Q increases.arrow_forward
- Facebook (not Mark Zuckerberg) would do which of the following actions according the Circular Flow diagram? Group of answer choices Buys, but does not sell. Sell and Buy (or Rent). Does not sell nor buys. Sell, but does not buy.arrow_forwardFirms would do which of the following actions according the Circular Flow diagram? Group of answer choices Sell, but does not buy. Sell and Buy (or Rent). Buys, but does not sell. Does not sell nor buys.arrow_forwardWhen the price of a good or a service increases, _______? Group of answer choices The demand curve shifts in the same direction. The supply curve shifts in the opposite direction. The demand curve shifts in the opposite direction. There is a movement along the demand curve.arrow_forward
- A foreign country to which we export but from which we do not import would do ______ according the Circular Flow Diagram? Group of answer choices Sell and Buy (or Rent). Sell, but does not buy. Buys, but does not sell. Does not sell nor buys.arrow_forwardNot use ai pleasearrow_forwardAfter the holiday season, many of us find ourselves thinking, “What will I do with another case for my iPad?” Often, both the gift giver and gift receiver could be made better off (that is, receive a higher level of utility or happiness) if cash had been given instead. To understand the economic rationale behind this, economists turn to the basic consumer theory model of budget constraints and indifference curves. Recall that an indifference curve maps out all possible consumption bundles of goods that yield the same level of utility to a given consumer. Indifference curves tell us nothing about what we can afford, but rather tell us how happy a particular bundle will make us. On the other hand, a budget constraint shows the consumption bundles that we can buy given our income and the prices of goods. Similarly, a budget constraint says nothing about what we would like to buy, but rather what we can afford. Suppose you consume only two types of goods: magazines and food. You have $300…arrow_forward
Principles of Economics (12th Edition)EconomicsISBN:9780134078779Author:Karl E. Case, Ray C. Fair, Sharon E. OsterPublisher:PEARSON
Engineering Economy (17th Edition)EconomicsISBN:9780134870069Author:William G. Sullivan, Elin M. Wicks, C. Patrick KoellingPublisher:PEARSON
Principles of Economics (MindTap Course List)EconomicsISBN:9781305585126Author:N. Gregory MankiwPublisher:Cengage Learning
Managerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-...EconomicsISBN:9781259290619Author:Michael Baye, Jeff PrincePublisher:McGraw-Hill Education