Which of the following is NOT a feature of Sweezy oligopoly?
A. Each firm believes that rivals will cut their prices in response to a price reduction, but will not raise their prices in response to a price increase.
B. The firms produce differentiated products.
C. Free entry and exit occurs in the market.
D. There are a few firms in the market serving many consumers.
Answer: C
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When potential GDP increases, long-run aggregate supply also increases
Indicate whether the statement is true or false
Gross domestic product is generally ________ national income
A) equal to B) greater than C) unrelated to D) less than
The above figure shows a payoff matrix for two firms, A and B, that must choose between a high-price strategy and a low-price strategy. Both firms setting a high price is NOT a Nash equilibrium because
A) setting a high price is the dominant strategy for each firm. B) neither firm can improve its payoff by setting a low price given that the other firm is setting a high price. C) there is no dominant strategy for either firm. D) both firms can improve their payoff by setting a low price given that the other firm is setting a high price.
Refer to Exhibit 10-8. The marginal propensity to save (MPS) is
a. 4.00. b. 0.25. c. 0.10. d. 0.90. e. 0.75.