Which characteristics best describe oligopolies?
a. low fixed costs
b. mutual interdependence
c. very large firms
d. identical pricing
e. many firms
B
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Refer to the scenario above. Which of the following will happen in equilibrium if Harry is known to be trustworthy?
A) Tom will trust Harry and Harry will cooperate. B) Tom will trust Harry and Harry will defect. C) Neither of them will make any money. D) Only Harry will make money.
A difference between moral hazard and adverse selection is that
a. moral hazard deals with pre-contractually determined public information b. moral hazard deals with post-contractually determined private information c. adverse selection deals with pre-contractually determined private information d. adverse selection deals with post-contractually determined public information
Direct foreign investment is considered an attractive investment because
a. it is usually focused on infrastructure b. it initiates projects that are later taken over by domestic entrepreneurs c. it only employs foreign workers so it doesn't interfere with domestic development planning d. it typically involves bringing into the LDCs new expertise e. it replaces domestic investment
Sophia sits behind Gabriel on an airplane. Gabriel owns the right to recline his seat and values this right at $10 . Sophia values a non-reclined seat in front of her at $40 . Assuming no transaction costs, which of the following represents an efficient solution?
a. Sophia offers Gabriel between $10 and $40 to not recline his seat. Gabriel accepts, and both parties are better off. b. Sophia offers Gabriel between $0 and $10 to not recline his seat. Gabriel accepts, and Sophia is better off. c. Sophia offers Gabriel between $10 and $40 to not recline his seat. Gabriel declines because he has the right to recline his seat. d. Gabriel offers Sophia between $10 and $40 to recline his seat. Sophia accepts, and both parties are better off.