Please answer this multiple choice.

e a 0 B I: Table 1 Two home-improvement stores (Lopes and HomeMax) in a growing urban area are interested in expanding their market share. Both are interested in expanding the size of their store and parking lot to acconnnodate potential growth in Jeir customer base. The following game depicts the strategic outcomes that result from the game. Increases in annual prots of the two home-improvement stores are shown in the table below. Lopes Increase the .stze ofstare Do not increase the Size of andparking lot More and parking lot Increase the Size Lopes : $1.0 million Lopes : $0.4 million of store and HomeMax = $1.5 million HomeMax = $3.4 million parking lot HomeMax Do not increase Lopes = $3.2 million Lopes = $2.0 million the size of store HomeMax = $0.6 million HomeMax = $2.5 million and parking lot 1. Refer to Table 1. Increasing the size of its store and parking lot is a dominant strategy for . Lopes, but not for HomeMax. . HomeMax, but not for Lopes. both stores. . neither store. 2. Refer to Table 1. When this game reaches a Nash equilibrium, annual prot will grow by $1.5 million for HomeMax and by $1.0 million for Lopes. . $3.4 million for HomeMax and by $0.4 million for Lopes. $0.6 million for HomeMax and by $3.2 million for Lopes. . $2.5 million for HomeMax and by $2.0 million for Lopes. . None of the above. 3. Refer to Table 1. Suppose the owners of Lopes and HomeMax meet for a friendly game of golf one aemoon and happen to discuss a strategy to optimize growth related prot. They should boi agree to . increase their store and parking lot sizes. . refrain from increasing their store and parking lot sizes. . be more competitive in capturing market share. . share the context of their conversation with the government's Trade Commission. . None of the above. 4. Refer to Table 1. Suppose the owners of Lopes and HomeMax meet for a friendly game of golf one aernoon and happen to discuss a strategy to optimize growth related prot. If they both agree to cooperate on a strategy that maximizes their joint prots, annual prot will grow by . $1.0 million for Lopes and by $1.5 million for HomeMax. . $0.4 million for Lopes and by $3.4 million for HomeMax. c. $3 .2 million for Lopes and by $0.6 million for HomeMax. d . $2.0 million for Lopes and by $2.5 million for HomeMax. e. None of the above Table 2 Two firms are considering going out of business and selling their assets. Each considers what happens if the other goes out of business. The payoff matrix below shows the net gain or loss to each firm. Firm A Stays in business Sells business A gains $9 million A gains $7 million Stays in business B gains $7million B gains $15 million Firm B A gains $15 million A gains $1 million Sells business B gains $8 million B gains $3 million 5. Refer to Table 2. Which firms have a dominant strategy? a. A and B b. Neither A nor B c. A but not B d. B but not A e. None of the above 6. Refer to Table 2. What is the Nash equilibrium? a. A and B both stay in business b. A stays in business, B sells c. B stays in business, A sells d. Both A and B sell e. None of the above 7. Externalities A) do become reflected in market prices, so they can be a source of economic inefficiency. B) are not reflected in market prices, so they can be a source of economic inefficiency. C) are not reflected in market prices, so they do not adversely affect economic efficiency. D) do become reflected in market prices, so they do not adversely affect economic efficiency. E) may or may not become reflected in market prices, but do not have an impact on economic efficiency in either event. 8. Because air cargo as an industry involves the generation of pollutants in engine exhaust, the equilibrium price of air cargo services A) is above the optimal level, and quantity is below the optimal level. B) is below the optimal level, and quantity is above the optimal level. C) and quantity of trucking services are both above the optimal level. D) and quantity of trucking services are both below the optimal level. E) must fall in order for the market to reach equilibrium. 9. A lighthouse is a public good A) because it doesn't cost any more to light the way for 105 ships than it does to light the way for 104 ships, but for no other reason. B) because there is no way to prevent those who haven't contributed to the lighthouse from seeing better because of it, but for no other reason. C) because the government produces it, and for no other reason. D) for the reasons in A and B together. E) for the reasons in A, B, and C together. 10. The government provides public education because A) public education is a public good B) public education is non-rival and nonexclusive. C) private education is rival and exclusive. D) public education combats the negative externalities of private education. E) public education provides positive externalities.ll. Corn akes are A) a rival good because many rms produce them. B) a rival good because if another person wants some corn akes society has to use additional resources to produce corn akes for that person. C) a non-rival good because there are only a few rms in the industry. D) a non-rival good because even if another person wants some corn akes so many corn akes are produced that no additional resources are used to satisfy this new customer's needs. E) a public good. 12. Karen's cat causes Danny to sneeze. Karen values her cat's companionship at $300 per year. The cost to Danny of tissues and her allergy medication is $350 per year. Based on the Coase theorem, a. Karen should pay Danny $400 so that she may keep her cat. b. Karen should pay Danny $350 for tissues and allergy medication c. Danny should pay Karen $325 to give away her cat. d. Danny should move. e. none of the above. 13.To achieve the optimal provision of public goods, the a. market should be allowed to an'ive at an equilibrium without government intervention. b. government must limit the provision of the goods. c. government must tax producers of the goods. (1. government must either provide the goods or subsidize their production. e. none of the above. 14. If the value of the marginal product of labor is less than the wage, then the rm could a. increase prot by hiring additional labor. b. increase prot by reducing the amount of labor hired. c. increase revenue by lowering output. (1. reduce total cost by hiring additional workers. e. none of the above. 15. A positive externality is shown by a marginal social benet (MSB) curve that is A) above and to the right of the demand curve for the good that generates it. B) below and to the left of the demand curve for the good that generates it. C) above and to the left of the supply curve for the good that generates it. D) below and to the right of the supply curve for the good that generates it. E) positively related to both the supply curve and the demand curve for the good that generates it