One of the strongest reasons that oligopolies exist is due to
A. marginal cost pricing.
B. lowest cost production.
C. the homogeneity of their products.
D. economies of scale.
Answer: D
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Suppose that for each firm in the competitive market for potatoes, long-run average cost is minimized at $0.20 per pound when 500 pounds are grown. The demand for potatoes is Q = 10,000/p
If the long-run supply curve is horizontal, then how much will consumers spend, in total, on potatoes? A) $0 B) $500 C) $10,000 D) $50,000
A monopolistically competitive firm's demand curve slopes downward because:
a. new firms are free to enter the market. b. there are a large number of firms in the market. c. a differentiated product gives the firm some monopoly power. d. the firm has complete information about the market. e. the firm sells a standardized product.
During the recession of 2007-2009, the Federal Reserve began cutting its target for the Federal Funds rate in
A. September of 2007. B. September of 2008. C. January of 2009. D. January of 2007.
Your boss, the mayor of a city, thought that she'd come up with a great way to raise city revenue: increase the tax on gasoline in the city! However, she discovered that the city was actually receiving less tax revenue after the gas tax increase than before. Incensed, she declared that the economic policy prescription of taxing goods with inelastic demand must be flawed. Comment on her conclusion.
What will be an ideal response?