Costume jewelry is produced in a monopolistically competitive market. One producer finds that MR = MC = $3 when output is 700 necklaces. An economist studying this information can conclude that:
A. the producer is charging a price of $3.
B. economic profit is $2,100.
C. the producer charges a price greater than $3.
D. new firms will want to enter.
Answer: C
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A merger between firms at different stages of production of a good
A) was made illegal by the Sherman Act. B) was made legal by the Clayton Act. C) is a vertical merger. D) is a horizontal merger.
When regulators chose to allow insolvent S&Ls to continue to operate rather than to close them, they were pursuing a policy of
A) regulatory forbearance. B) regulatory kindness. C) ostrich reasoning. D) ignorance reasoning.
The point at which buyers and sellers "agree" on the quantity of a good they are willing to exchange at a given price is called:
A. equilibrium. B. optimization. C. maximization. D. market collapse.
Opportunistic behavior by oligopolies means
A. that firms cooperate in the short run for current gains. B. that firms cooperate in both the long run and in the short run to prevent others from entering the industry. C. that firms refuse to cooperate in the short run. D. that firms refuse to honor their product guarantees.