AirTran, JetBlue, Southwest Airlines and Sun Country Airlines are generally referred to as low-cost airlines
Why might this type of industry be used as an example of a contestable market? Can you think of any reasons why this might not be a good example of a contestable market?
Entrants have the possibility of leasing aircraft and should be able to respond to high profits by quickly entering and exiting. There may be entry/exit barriers in the form of terminal leases, availability and predatory pricing by incumbents, signaled through built-in overcapacity which may make this a weak example of a contestable market.
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The above figure shows the marginal social benefit and marginal social cost curves of doughnuts in the nation of Kaffenia. What is the marginal social cost to the economy of Kaffenia of producing the 300th dozen doughnuts each day?
A) $10.00 per dozen B) $8.00 per dozen C) $6.00 per dozen D) $4.00 per dozen
Eliminating frictional unemployment would be good for the economy
Indicate whether the statement is true or false
If a cartel is unable to monitor its members and punish those firms that violate their agreement, then
A) the member firms will each act as price setters. B) the cartel will prosper in the long run. C) the market will become a monopoly. D) the cartel will fail.
GDP ignores all of the following EXCEPT:
A. household production. B. the value of leisure time. C. products produced in other countries that are sold in the United States. D. changes in the environment that occur in the production of output.