As new firms enter an existing industry, it can be expected that the
a. market price will increase
b. output of existing firms will increase
c. profit of existing firms will increase
d. market demand should decrease
e. profit of existing firms will decrease
E
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In late 2010 the National Bank of Australia offered a 4 percent interest rate on a savings account while Bank of America offered 2 percent. This difference means that
A) people expect the U.S. dollar to appreciate to 8 percent against the Australian dollar and interest rate parity to occur. B) there will be a surplus of U.S. dollars in the foreign exchange market. C) people expect the U.S. dollar to appreciate by 2 percent against the Australian dollar and interest rate parity to occur. D) there will be a shortage of Australian dollars in the foreign exchange markets.
In-kind transfer payments might not be used in the desired way due to _____
a. the fungibility of money b. poor incentives c. incomplete information d. the incentive to substitute into leisure
Macroeconomics is a branch of economics that studies: a. the different costs associated with production
b. the price and output decisions made by different industries. c. the overall performance of the economy. d. the role of a market in determining an efficient outcome. e. the role of input suppliers in determining the price and quantity of output.
If you advertise and your rival advertises, you each will earn $5 million in profits. If neither of you advertises, you will each earn $10 million in profits. However, if one of you advertises and the other does not, the firm that advertises will earn $15 million and the non-advertising firm will earn $1 million. Suppose this game is repeated for a finite number of times, but the players do not know the exact date at which the game will end. The players can earn collusive profits as a Nash equilibrium to the repeated play of the game if the probability the game terminates in any period is:
A. 1. B. close to zero. C. greater than 1. D. None of the answers is correct.