In the price-leadership model,
a. firms believe that price increases result in a very elastic demand, while price decreases result in an inelastic demand for their product.
b. each firm acts as a price taker.
c. one dominant firm takes the reactions of all other firms into account in its output and pricing decisions.
d. firms coordinate their decisions to act as multiplant monopolies.
c
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When a firm increased its output by one unit, its AC rose from $45 to $50. This implies that its MC is
A) $5. B) between $45 and $50. C) greater than $50. D) Cannot be determined from the above information
How many units should the profit maximizing firm produce?
a. 1 b. 2 c. 3 d. 4
In a perfectly competitive market where firms are currently experiencing economic profits in the short-run, which of the following is least likely to occur during the long-run?
A. An increase in the market quantity demanded. B. A rightward shift in the market supply curve. C. A decline in the ATC and MC curves. D. An increase in marginal revenue.
If the MPC is 0.8, then the multiplier is 0.2.
Answer the following statement true (T) or false (F)