Figure 12.1 shows a successful price-fixing arrangement (cartel) between two identical firms. If the cartel collapses and the two firms compete against each other, each firm's profit will be ________ and the quantity will be ________.
A. smaller; smaller
B. smaller; greater
C. greater; smaller
D. greater; greater
Answer: B
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Suppose, in 2008, the federal debt was $5 trillion. That year, the United States ran a deficit of $455 billion. During the course of the year, the inflation rate was 3.8%. How much is the "inflation tax"?
What will be an ideal response?
Which of the following is least likely to increase the demand for new tires?
a. a decrease in the price of tires b. a decrease in the price of cars c. an increase in consumer income d. an increase in the number of miles people drive per year
If aggregate demand shifts inward over a long period of time, with aggregate supply held constant, the economy should experience
A. unemployment. B. budget surpluses. C. stagflation. D. inflation.
TRK, Inc replaces its outdated assembly line with latest robot technology. Which of the following most likely caused this to happen?
a. The money supply decreased. b. Interest rates dropped. c. The return to saving increased. d. The cost of borrowing increased.