Let the production function be q = ALaKb. The function exhibits increasing returns to scale if
A) a + b = 1.
B) a + b > 1.
C) a + b < 1.
D) Cannot be determined with the information given.
B
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A firm facing a horizontal demand curve: a. cannot affect the price it receives for its output
b. is unlikely to price its goods below market price. c. faces a perfectly elastic demand curve for its product. d. is characterized by all of the above.
Other things equal, which of the following goods would have the most inelastic price elasticity of demand?
A. All red t-shirt sold in the U.S. B. A red t-shirt from Macy's (a large department store). C. A t-shirt from The Gap (a famous American retail store). D. All shirts, of any color, sold in the U.S.
Member banks of the Federal Reserve System
A. advise the Fed on monetary policy. B. are immune from the effects of monetary policy. C. vote on members of the Board of Governors. D. have little control over the system they “own.”
Within a game theory model, if a change in decision-making raises firm A's profits by $1 million and lowers firm B's profits by $1 million, the game is a
A. zero-sum game. B. cooperative game. C. positive-sum game. D. negative-sum game.