Which of the following statements is correct?
A) A firm in oligopoly will charge a price that is lower than the price charged in perfect competition.
B) If firms in oligopoly look only at their own self-interest in deciding the output they should produce, the total market output will exceed that of a monopoly.
C) If one oligopolist reduces the price of its product, its demand curve shifts leftward.
D) Because many producers join to form a cartel, the market becomes monopolistic competition.
E) It is in the self-interest of each firm in an oligopoly to take the actions that maximize all the firms' joint profit.
B
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Answer the following statement(s) true (T) or false (F)
1. The amount of output produced by two firms in a Cournot oligopoly setting is greater than that produced by a monopoly, but smaller than that which would be produced if the market were perfectly competitive. 2. According to the Bertrand model, price and output is higher under oligopoly than under competition. 3. A firm has monopoly power when it is the single seller of a good or service. 4. If a monopoly desires to raise its profits, it can simply raise the price it charges. 5. We know that the producer's surplus accruing to a simple monopoly firm must be greater than operating in a competitive market, else firms would not act as monopolists.
How would the elimination of a sales tax affect the market for a product that had been subject to the tax?
A) The equilibrium price for the product would fall by less than the amount of the tax. B) The reduction in government revenue from the tax would be made up by an increase in property taxes. C) The supply of the product would become more elastic. D) The demand for the product would rise and the equilibrium price would fall by the amount of the tax.
The account that shows international transactions involving financial transactions (stocks, bonds, bank loans, etc.) is called the
A) trade balance. B) current account. C) balance of payments. D) capital account.
One of the main determinants of real GDP per person is the growth of capital per person. Which of the following variables does NOT determine the growth of capital per person in the long run?
A) average saving rate B) output-to-capital ratio C) marginal tax rate on investment D) depreciation rate