Consider a Cournot oligopoly consisting of four identical firms producing good X. If the firms produce good X at a marginal cost of $7 per unit and the market elasticity of demand is ?2, determine the profit-maximizing price.
A. $12 per unit
B. $6 per unit
C. $8 per unit
D. $10 per unit
Answer: C
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In the years after the Great Recession, the inflation rate has been
A. volatile. B. diminishing over time. C. stabilized at 0. D. relatively low.
Starting from long-run equilibrium, a large tax increase will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. recessionary; lower; potential B. expansionary; lower; potential C. expansionary; higher; potential D. recessionary; lower; lower
When production of a good results in an external cost, the unregulated competitive market equilibrium is inefficient because ________
A) MSC = MC B) MSC = MB C) MSC > MB D) MSC < MB E) MSC is undefined
If the labor supply curve is upward-sloping, an adverse supply shock causes ________ in employment and ________ in the real wage
A) no change, a decrease B) a decrease, a decrease C) a decrease, no change D) a decrease, an increase E) an increase, an increase