1. Suppose that there is a permanent decrease in demand for daisies. Which of the following is the most likely response in this market?

Group of answer choices

A, Profits will initially increase, as firms benefit from the scarcity, but profits will go back up again in the long run.

B, Profits will initially decrease, but entry of other firms will drive profits back up again in the long run.

C, Profits will initially decrease, and then remain at this lower level permanently.

D, Profits will initially decrease, but exit of other firms will drive profits back up again in the long run.

2. Would it be surprising to see a firm in a monopolistically competitive market making positive economic profits year after year for a long time?

Group of answer choices

A, No, because economic profits must be positive in the long run equilibrium

B, Yes, because economic profits must be zero in the long run equilibrium

C, No, because monopolistically competitive firms continue to innovate

D, Yes, because monopolistically competitive firms must have excess capacity

3. The below table shows a payoff matrix for a one-off simultaneous-move game.

Player 1, the row player, selected Up or Down. Player 2, the column player, selects Left or Right.

The row player's payoff is shown on the left, and the column player's on the right.

Left

Right

Up

$3, $2

$4, $4

Down

$5, $3

$2, $6

Find the Nash Equilibrium.

Group of answer choices

A, Up, Right

B, Up, Left

C, Down, Left

D, Down, Right

4. Which of the follow statements isnottrue about a one-off simultaneous move game?

Group of answer choices

A, A game can only have one Nash Equilibrium.

B, If both players have dominant strategies, then both players playing those strategies must be a Nash Equilibrium.

C, A Nash Equilibrium outcome is not always the best payoff for both players.

D, In a Nash Equilibrium, each player chooses a strategy that is the best response to their opponent's strategy.

5. Which of the following occurrences will be measured directly as an increase in Australia's GDP? (Do not include any likely follow-on impacts.)

Group of answer choices

A, A Chinese owned mine situated in Australia extracts and sells iron ore.

B, An Australian consumer orders a phone online from a Singaporean retailer.

C, An Australian buys a second hand Australia textbook from their classmate.

D, The government increases the weekly payment paid to the unemployed.