All of the following are true if both the upstream and downstream firm have market power except which one?
A) Both the upstream firm and the downstream firm set a price that exceeds their respective marginal costs.
B) If the two firms were to merge, the combined firm would earn the same profit than if they did not merge.
C) This situation is referred to as a successive monopoly.
D) This situation is referred to as double marginalization.
B) If the two firms were to merge, the combined firm would earn the same profit than if they did not merge.
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Hurricane Katrina destroyed oil and natural gas refining capacity in the Gulf of Mexico. This subsequently drove up natural gas, gasoline, and heating oil prices. As a result, this should
A) shift the short-run aggregate supply curve to the right. B) shift the short-run aggregate supply curve to the left. C) move the economy down along a stationary short-run aggregate supply curve. D) move the economy up along a stationary short-run aggregate supply curve.
If the central bank of a country increases the discount rate, a commercial bank would: a. experience a decrease in its net worth
b. hold a higher level of reserves. c. take more loans from the central bank. d. make more loans with its increased loan assets.
In the short run, a firm operating in a monopolistically competitive market
a. produces an efficient output level. b. chooses the maximum price to maximize profits. c. produces where marginal cost is minimized. d. chooses a price that exceeds marginal revenue.
If higher tariffs and more restrictive quotas reduced the imports of the United States,
What will be an ideal response?