Figure 8.8 shows demand, marginal revenue, and costs of a duopolist. Suppose that the two duopolists have the same costs. If the two firms form a cartel and charge the profit-maximizing monopoly price, compared to perfect competition, the market price will be ________ and the total output level will be ________.
A. higher; greater
B. higher; smaller
C. lower; greater
D. lower; smaller
Answer: B
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An economy with an expansionary gap will, in the absence of stabilization policy, eventually experience a(n) ________ in the inflation rate, leading to a(n) ________ in output.
A. decrease; increase B. increase; increase C. decrease; decrease D. increase; decrease
A firm that is the only seller of a good with no close substitutes is a(n)
A) perfect competitor. B) monopolistic competitor. C) oligopolist. D) monopolist.
During the past 1000 years, the income per person of the world has
a. increased each century, and it is now five times greater than the level of 1000 years ago. b. risen rapidly in Western Europe, North America, Japan, and Australia, but there has been little change in income per person in other parts of the world. c. increased by approximately tenfold during the past 200 years, but there was only a small increase during the 800 years prior to 1800. d. persistently increased, but the largest increases occurred during the 1200 to 1800 era.
In an oligopolistic market, each firm
A. has a constant marginal cost. B. must consider the reaction of rival firms when making a pricing or output decision. C. faces a perfectly elastic demand function. D. produces at minimum average cost in the long run.