Schumpeter's hypothesis states that
a. monopolists are always trying to raise prices
b. competition does not always generate the lowest prices
c. when government fosters competition, prices fall
d. price-takers create the highest prices
e. efficiency is highest under conditions of perfect competition
B
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In the short run, how will a profit-maximizing monopolist react if its marginal cost suddenly increases? It will
a. lower price to expand revenue possibilities. b. reduce output and raise price. c. maintain the current price if profit is still positive. d. increase plant size to lower marginal cost. e. decrease plant size to lower marginal cost.
Using Figure 1 above, if the aggregate demand curve shifts from AD2 to AD3 the result in the short run would be:
A. P1 and Y2. B. P2 and Y3. C. P3 and Y1. D. P2 and Y2.
Suppose that there are two types of cars, good and bad. The qualities of cars are not observable but are known to the sellers. Risk-neutral buyers and sellers have their own valuation of these two types of cars as follows: Types of CarsBuyer's ValuationSeller's ValuationGood (50% probability)5,0004,500Bad (50% probability)3,0002,500Now suppose that sellers value a good car at $4,500 and a bad car at $2,500, and quality is not observed by the buyers. What is the highest price that risk-neutral buyers will offer for a used car if they recognize adverse selection?
A. $4,000 B. $3,000 C. $4,500 D. $2,500
Which of the following contribute to productivity growth?
A) investment in plants and equipment B) innovation resulting in new products C) innovation resulting in new processes D) all of the above