Assume that the countries of Irun and Urun are the only two producers of crude oil. Further assume that both countries have entered into an agreement to maintain certain production levels in order to maximize profits. In the world market for oil, the demand curve is downward sloping.

Refer to Scenario. In a nonrepetitive game, what is the dominant strategy of Irun when production levels are in accordance with the collusive agreement?

a.unilaterally increase production

b.unilaterally decrease production

c.increase production only after Urun increases production

d.decrease production only after Urun increases production

Which statement best explains the relationship between accounting profit and economic profit?

a.If economic profit is zero, then accounting profit can be positive.

b.If economic profit is zero, then accounting profit must be zero.

c.If accounting profit is zero, then economic profit must be zero.

d.If accounting profit is zero, then economic profit can be positive.

When advertising enhances the ability of markets to allocate resources, what is it most likely to be doing?

a.increasing elasticity of supply

b.addressing psychological rather than informational characteristics of the good

c.conveying information about price, the existence of new products, or locations of retail outlets

d.manipulating people's tastes