A cartel will break down more easily if
A) there are only a few members.
B) industry demand is very stable.
C) market prices can be observed easily.
D) there are many entrants in the industry.
Answer: D
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What will be an ideal response?
Mr. Smith earns $100,000 per year. Each year he spends $50,000 and saves $50,000. He pays a 5 percent sales tax on all of his spending. Assuming the sales tax is the only tax he pays, his average tax rate out of his income is
A) 0 percent. B) 2.5 percent. C) 3.5 percent. D) 5.0 percent.
If the economy is operating at full employment and there is a substantial increase in the money supply, the quantity theory of money predicts an increase in
(a) the velocity of money (b) real output (c) interest rates (d) unemployment (e) the price level
Why does the price level in a perfectly competitive market move toward the zero-profit point?
a. Because firms enter and exit the market in response to gains and losses b. Because short-run losses reverse the effects of long-run gains c. Because profitable firms increase short-run productivity d. Because firms operate below the average cost curve