Why doesn't a competitive firm reduce its price below the industry price to increase sales?
A competitive firm can sell all it wishes at the going industry price; that is the meaning of a horizontal demand curve. There would be no point to charging less if one can sell all one wants at a higher price. Furthermore, such a policy would result in losses in the long run, where industry price results in zero economic profits and any lower price would result in losses.
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The decisions of firms and households are
A) coordinated by but not totally controlled by the government. B) made independently of one another. C) controlled by but not totally coordinated by the government. D) coordinated by markets. E) unexplainable by the circular flow model.
In some cases, firms that are accused of antitrust violations by federal authorities will plead guilty to the criminal charges in order to avoid facing the same charges in a private or civil trial. Why?
A) Attorneys in civil cases tend to be more effective at proving their claims. B) The penalties for a conviction in a civil or private case are treble damages, or three times larger than the penalties in a criminal or public case. C) Judges in criminal cases are known to be more lenient. D) none of the above
A monopolist will always enlarge its revenues by selling more output
a. True. b. False.
Fiat money
a. has no intrinsic value. b. is backed by gold. c. is a medium of exchange but not a unit of account. d. is any close substitute for currency such as checkable deposits.