In general, the entry-deterrence game will generate a market price:
A. higher than the monopoly price.
B. lower than the monopoly price but higher than the duopoly price.
C. the same as the monopoly price.
D. the same as the duopoly price.
Answer: B
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The American Bar Association administers the bar examinations that prospective lawyers must pass before being allowed to practice law. The exam system thus allows the ABA to act like a
a. monopsony. b. union that can restrict the supply of lawyers. c. union that can increase the number of lawyers. d. None of the above is correct.
Suppose that when a perfectly competitive firm produces 500 units of output a day, it earns an economic loss. If the price of each unit of output is $1.50, then, in the short run, it's clear that this firm:
A. should shut down. B. is not maximizing its profit. C. should produce more than 500 units a day. D. should not shut down if its total variable cost is less than $750.
In the extended aggregate demand-aggregate supply model:
A. long-run equilibrium occurs wherever the aggregate demand curve intersects the short-run aggregate supply curve. B. the long-run aggregate supply curve is horizontal. C. the price level is the same regardless of the location of the aggregate demand curve. D. long-run equilibrium occurs at the intersection of the aggregate demand curve, the short- run aggregate supply curve, and the long-run aggregate supply curve.
Which of the following actions is an example of an expansionary fiscal policy?
A) an increase in the discount rate B) a decrease in defense spending C) a sale of government securities in the open market D) a decrease in net taxes.