Econ 201 Questions And Answers Graded A+
First Welfare Theorem - Solution -Perfectly Competitive Market All goods sold are
somewhat equal; at equal prices)
-There are no externalities
-Pareto Efficient
Collusion - Solution An event where agents in a game reach an agreement over
strategies to play
Payoff Matrix - Solution A diagrammatic representation of a game which shows all the
possible strategies for each player/ all possible outcomes and payoffs.
Prisoners Dilemma - Answer A cause in which individually rational behaviour leads to a
jointly inefficient outcome
Nash Equilibrium - Answer A set of strategies (one for each player) in which each
players strategy is the best option for that player, given the chosen strategy of the other
player
Tit-For-Tat Strategy - Answer A strategy in which a player follows of course of action
consistent with the other players choices e.g. if one player does not cooperate, the
other player will retaliate
Dominant Strategy - Answer A players best choice, if it exists, regardless of his
opponents strategy
Inelastic - Answer Price change does not effect quantity e.g. insulin
, Elastic - Answer Price change effects quantity e.g. food
Determinants of Demand - Answer -prices of other goods
-income
-# of buyers
-consumer tastes
Determinants of Supply - Answer -Price of input
-price of labor
-# of sellers
-technology
Normal/Luxury goods - Answer Income goes up, demand increases e.g. food
Inferior Goods - Answer Income goes up, demand decreases e.g. public transportation
Elastic Demand - Answer Good with many substitutes
Regressive Tax - Answer Takes a larger tax from low income earners then high income
Progressie Tax - Ans Takes a larger tax from high income earners then low
Supply/Demand Shift Left - Ans Quantity falls; Price stays Ambiguous
Supply/Demand Shift Right - Ans Quantity rises; Price stays ambiguous
Price Floor - Ans Price control on how low a price can be charged to a product. When
First Welfare Theorem - Solution -Perfectly Competitive Market All goods sold are
somewhat equal; at equal prices)
-There are no externalities
-Pareto Efficient
Collusion - Solution An event where agents in a game reach an agreement over
strategies to play
Payoff Matrix - Solution A diagrammatic representation of a game which shows all the
possible strategies for each player/ all possible outcomes and payoffs.
Prisoners Dilemma - Answer A cause in which individually rational behaviour leads to a
jointly inefficient outcome
Nash Equilibrium - Answer A set of strategies (one for each player) in which each
players strategy is the best option for that player, given the chosen strategy of the other
player
Tit-For-Tat Strategy - Answer A strategy in which a player follows of course of action
consistent with the other players choices e.g. if one player does not cooperate, the
other player will retaliate
Dominant Strategy - Answer A players best choice, if it exists, regardless of his
opponents strategy
Inelastic - Answer Price change does not effect quantity e.g. insulin
, Elastic - Answer Price change effects quantity e.g. food
Determinants of Demand - Answer -prices of other goods
-income
-# of buyers
-consumer tastes
Determinants of Supply - Answer -Price of input
-price of labor
-# of sellers
-technology
Normal/Luxury goods - Answer Income goes up, demand increases e.g. food
Inferior Goods - Answer Income goes up, demand decreases e.g. public transportation
Elastic Demand - Answer Good with many substitutes
Regressive Tax - Answer Takes a larger tax from low income earners then high income
Progressie Tax - Ans Takes a larger tax from high income earners then low
Supply/Demand Shift Left - Ans Quantity falls; Price stays Ambiguous
Supply/Demand Shift Right - Ans Quantity rises; Price stays ambiguous
Price Floor - Ans Price control on how low a price can be charged to a product. When
