Price leadership is an example of explicit collusion by oligopolies
a. True
b. False
Indicate whether the statement is true or false
False
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According to the law of supply
A) people buy more of a good when the price increases. B) people buy less of a good when the price decreases. C) producers provide more of a good when the price decreases. D) producers provide less of a good when the price decreases.
Consider a consumer who spends all income on only two goods: bread and wine. An extra loaf of bread would give the consumer 10 extra util, while an extra bottle of wine would give the consumer 60 extra utils. Bread costs 50ยข per loaf, and wine costs $6 per bottle. In this situation, the consumer:
a. could increase utility by buying more bread and less wine. b. could increase utility by purchasing more wine and less bread. c. has maximized utility and attained consumer equilibrium. d. is violating the law of diminishing marginal utility.
Using Figure 1 above, if the aggregate demand curve shifts from AD2 to AD1 the result in the long run would be:
A. P4 and Y1. B. P4 and Y2. C. P5 and Y1. D. P5 and Y2.
A perfectly competitive firm will have an economic profit of zero if, at its profit-maximizing output, its marginal revenue equals its
A) average total cost. B) marginal cost. C) average variable cost. D) average fixed cost.