WGU Global Economics for Managers Exam Questions

A Nash equilibrium occurs when each participant in a strategic interaction chooses the best available strategy given the strategies chosen by others. Option C is correct because no actor has an incentive to change its strategy unilaterally once the equilibrium is reached. This concept is central to game theory and is especially useful in oligopoly analysis, where firms must consider how rivals will respond to pricing, output, advertising, or product decisions. Option A describes the prisoner's dilemma more specifically, which can produce a Nash equilibrium but is not the definition itself. Option B describes collusion or cartel behavior. Option D describes illegal coordinated action by firms. Managers use Nash equilibrium logic to anticipate competitor behavior and understand why mutually beneficial cooperation can be unstable.

===============

Globalization can be viewed from different perspectives. One view treats globalization as a relatively new force that has intensified in recent decades due to major advances in technology, transportation, communication, global finance, and international trade liberalization. This view emphasizes that modern globalization is different from earlier cross-border exchange because firms, consumers, capital markets, and supply chains are now connected at much greater speed and scale. Option B is correct because it captures the ''recent force'' view of globalization. Option A is too idealistic because globalization creates both benefits and costs. Option C is incorrect because globalization is not primarily an agreement to prevent wars. Option D is also incorrect because globalization often increases innovation through competition and knowledge transfer.

===============

The defender strategy is appropriate when industry pressure to globalize is low and the firm's competitive assets are customized to the home market. In this situation, the firm does not face strong pressure to expand globally, and its strengths are mainly local, such as domestic customer relationships, local distribution knowledge, local brand reputation, or familiarity with national regulations. Option C is correct because a defender focuses on protecting its home-market position by exploiting local advantages that multinational enterprises may find difficult to copy. A contender strategy fits high globalization pressure with home-market-customized assets. An extender strategy would involve using transferable capabilities abroad, and a dodger strategy usually involves cooperating with or selling to multinational firms when pressure is high and assets are weak. Therefore, defender is the correct response.

===============

According to Global Economics for Managers, firms should increase production when marginal revenue (MR) exceeds marginal cost (MC), making option C correct.

In this case, MR = $1,000 and MC = $600. Producing one additional unit generates more revenue than cost, increasing profit by $400. Rational, profit-maximizing firms should continue expanding output as long as MR > MC.

This decision rule applies across market structures, including monopoly, oligopoly, and perfect competition. The firm should stop increasing production only when MR equals MC.

Options A, B, and D would cause the firm to forgo profitable opportunities.

Thus, option C is the correct managerial response.

In Global Economics for Managers, monopolies arise when barriers to entry prevent competitors from entering a market. Two common barriers are control of a key resource and economies of scale, making options A and B correct.

When a single firm owns a unique or scarce resource, competitors cannot produce the good without access to that resource. Economies of scale create monopolies when one firm can produce at a lower average cost than multiple firms due to high fixed costs.

Options C, D, and E promote competition rather than monopoly.

Thus, options A and B correctly identify monopoly-creating barriers to entry.