Firms exist because of the low cost associated with creating complete contracts
Indicate whether the statement is true or false
False
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In a country without foreign trade and income taxes, if the government decreases autonomous spending and autonomous taxes by 50 then total expenditures and output will
A) increase by 50 if the MPC is 1. B) decrease by 50 for any value of the MPS greater than zero. C) decrease by 100 if the MPS is 0.5. D) increase by 200 if the MPS is 0.25.
Antitrust enforcement of vertical relationships is generally focused on
a. The dominant firm using vertical contracts to extend market power to other levels of the supply chain b. Vertical contracts that increase the intensity of competition c. Vertical contracts that help consumers d. All of the above
When supply shifts to the left, it would make the surplus from a price floor smaller, other things equal
a. True b. False Indicate whether the statement is true or false
Cartels frequently break down in the long run because
a. they are illegal b. tacit collusion is illegal c. contracts and agreements are legally binding d. cooperative behavior usually lowers profits for the entire industry e. members have an incentive to increase output