In a Cournot oligopoly with N firms and identical marginal costs, the relationship between the price elasticity of market demand and that of the firm is:
A. No deterministic relationship.
B. EM = EF.
C. EM = EF/N.
D. EM = NEF.
Answer: C
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How do large increases in oil prices affect the economy?
What will be an ideal response?
The Volcker disinflation
a. had virtually no impact on output, just as the classical dichotomy suggested. b. was associated with rising output, perhaps due to expansionary fiscal policy. c. caused output to fall, but by less than the typical estimate of the sacrifice ratio suggested. d. None of the above is correct.
A perfectly inelastic demand curve has an elasticity coefficient of:
A. 0. B. 1. C. less than 1. D. infinity.
Starting from long-run equilibrium, a war that raises government purchases results in ________ output in the short run and ________ output in the long run.
A. lower; potential B. higher; potential C. higher; higher D. lower; higher