Exhibit 15-5 Refer to Exhibit 15-5

question 8

Multiple Choice

Exhibit 15-5 Refer to Exhibit 15-5.In the game:

• A) if General Mills prices high, Kellogg's is better off pricing high.
• B) if General Mills prices high, Kellogg's is better off pricing low.
• C) if Kellogg's prices high, General Mills is better off pricing high.
• D) the Nash equilibrium is for both firms to price high.

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Definitions:

Personal Income Tax

A tax that governments impose on individuals directly based on their income, including wages, salaries, and investment earnings.

Aggregate Supply

represents the total supply of goods and services that firms in an economy are willing and able to produce at a given overall price level and in a given time period.

Economic Growth

The increase in the inflation-adjusted market value of the goods and services produced by an economy over time.

Business Cycle

The natural rise and fall of economic growth over time, consisting of periods of expansion, peak, contraction, and trough.