Answer the following statement(s) true (T) or false (F)
1. Contestable market conditions will cause a natural monopoly to produce the competitive quantity.
2. In a contestable market with room for many firms, industry output will be the same as in a successful cartel.
3. The Cournot oligopoly model is based on the assumption that firms treat their rivals' output as fixed and given.
4. Firms' total output is higher in the Cournot oligopoly model than in the Bertrand oligopoly model.
5. In both competition and monopolistic competition, free entry and exit guarantee that the industry's output is produced at the least possible cost.
1. False
2. False
3. True
4. False
5. False
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The portion of the long-run average cost curve in which economies of scale are experienced shows that as output increases, the
A) average total cost decreases. B) average total cost increases. C) marginal cost increases. D) marginal cost decreases. E) average variable cost is constant and the average fixed cost decreases.
Which of the following are NOT examples of "convergence"?
A) Japan and Europe B) individual states within the United States C) regions within western Europe D) major nations in Latin America and Western Europe
Legal reserve requirements specify that banks must hold a certain percentage of their deposit liabilities
a. in currency only. b. as deposits at regional Federal Reserve Banks only. c. either in currency or as deposits at regional Federal Reserve Banks. d. None of the above
If a bond offers $1,000 in interest payments at the end of each of next 5 years and a repayment of $10,000 also at the end of the 5 years and the current discount rate is 3 percent, what is the present value of the bond?
A) $12,569 B) $13,205 C) $10,857 D) $4,580