Two identical firms compete as a Cournot duopoly. The demand they face is P = 100 ? 2Q. The cost function for each firm is C(Q) = 4Q. The equilibrium output of each firm is:
A. 32.
B. 36.
C. 16.
D. 8.
Answer: C
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The price charged by a monopolist is the point on the demand curve that corresponds to the output where marginal revenue equals marginal cost
a. True b. False Indicate whether the statement is true or false
The relatively low rate of inflation coupled with a low unemployment rate that occurred in the 1990s represented a “normal” economic situation.
Answer the following statement true (T) or false (F)
If the cost of medical care increases by 40 percent, then, other things the same, the CPI is likely to increase by about
a. 0.9 percent. b. 3.2 percent. c. 8.0 percent. d. 40 percent.
According to the misperceptions theory of the short-run aggregate supply curve, if a firm thought that inflation was going to be 4 percent and actual inflation was 2 percent, then the firm would believe that the relative price of what it produces had
a. increased, so it would increase production. b. increased, so it would decrease production. c. decreased, so it would increase production. d. decreased, so it would decrease production.