Giving a Fear a Name Helps Diffuse Its Power

question 11

True/False

Giving a fear a name helps diffuse its power.

Understand how taxes affect both buyers and sellers in the market.

Analyze the impact of taxes on market equilibrium, including changes in surplus and tax revenue.

Identify how taxes shift supply and demand curves.

Calculate the total surplus before and after a tax is imposed.

---

Definitions:

Best Response

In game theory, it is the strategy that yields the highest payoff for a player, given the strategies chosen by other players.

Nash Equilibrium

A concept in game theory where each player's strategy is optimal, given the strategies of all other players, resulting in no incentive for unilateral shifts.

Game of Chicken

A game theory model where two players head towards each other on a collision path; the one who swerves is considered 'chicken,' but if neither swerves, both face disastrous outcomes.

Simultaneous Game

A scenario in game theory where all players make their decisions at the same time without knowledge of the other players' choices.