In the contestable market oligopoly model, firms ________ produce where price exceeds marginal cost.
A. are not legally allowed to
B. do not always
C. never
D. always
Answer: B
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If in Chicago the interest rate is 5 percent a year and in Vancouver it is 4 percent a year, ________
A) the quantity of Canadian dollars purchased will increase B) the Canadian dollar is expected to depreciate C) interest rate parity does not exist D) the U.S. dollar is expected to depreciate
In 1973, 1979 and 2007, the U.S. economy was hit by ________
A) the collapse of the financial sector B) the assassination of a Federal Reserve Board member C) three major aggregate supply shocks D) the after-effects of the process of creative destruction
Perfectly competitive firms are earning economic profits at a market price of $18 and an average total cost of $15. If new firms enter and increase the average total cost for all firms, the market price will ________ until ________.
A) fall; it reaches the new lower average total cost B) increase; it reaches the new higher average total cost C) fall; it reaches the new higher average total cost D) increase; economic profits are equal to zero
Other things being equal, the marginal revenue product (MRP) curve for a competitive seller
A) lies below the MRP curve for a monopolist. B) is identical to the MRP curve for a monopolist. C) lies above the MRP curve for a monopolist. D) is upward sloping whereas a monopolist has a downward sloping MRP curve.