Efficiency is an important social goal because:
A. movements toward economic efficiency make the total economic pie larger.
B. it assures a normative outcome.
C. it assures a fair outcome.
D. it takes into consideration the distribution of income.
Answer: A
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In a duopoly with a collusive agreement and in a one-time only game, a firm's profit is largest if it ________ the agreement and if the other firm ________ the agreement
A) complies with; complies with B) complies with; cheats on C) cheats on; complies with D) cheats on; cheats on
The price elasticity of demand for movies is approximately 1 and 500,000 tickets are sold per day. If the average price of a movie ticket increases by 20 percent, the number of tickets sold each day decreases to ________
A) 400,000 B) 300,000 C) 420,000 D) 475,000
If an average cost pricing rule is imposed on the firm in the figure above, the firm will make an economic profit of
A) zero. B) -$240. C) $150. D) $400.
Possible barriers to entry of new firms into an industry
a. include patents and controls over raw materials. b. enable monopolists to enjoy long-run profits. c. may consist of substantial economies of scale. d. All of these.