Suppose Acme and Mega produce and sell identical products and face zero marginal and average cost. Below is the market demand curve for their product.
Suppose Acme and Mega decide to collude and work together as a monopolist with each firm producing half the quantity demanded by the market at the monopoly price. If Mega cheats on the agreement by reducing its price to $1 while Acme continues to comply with the collusive agreement, then Mega's economic profit will be ________.
A. $150
B. $200
C. $100
D. $75
Answer: A
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When Grayce deposits $4,000 cash in her checkable deposit at the Beach Bank and the Beach Bank's excess reserves increase by $3,600, the desired reserve ratio is
A) 5 percent. B) 90 percent. C) 10 percent. D) 15 percent. E) $400.
Which of the following conditions distinguishes perfect competition from monopolistic competition?
a. the number of sellers b. freedom of entry and exit c. homogeneity of the product d. none of the above
If the Fed lowered the required reserve ratio,
a. excess reserves would decrease b. the money supply would decrease c. the money supply would increase d. banks would borrow more from the Fed e. loans would earn more interest
If a rent control policy is enacted to protect apartment renters, this is likely to lead to
A. an increase in the supply of apartments. B. rise in the number of households looking for rental units. C. increased investment in rental properties. D. the conversion of office buildings to rental apartments.