Which of the following barriers to entry can best explain the continued success of a product that has been shown to be, in some way, harmful to the health of consumers?
A) Patent.
B) Consumer lock-in.
C) Brand loyalty.
D) Ownership of an essential resource.
C
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Explain the difference between a cartel and tacit collusion. Is tacit collusion illegal in the United States? Explain
What will be an ideal response?
If the government wants to encourage the consumption of a particular good, they should enact:
A. a subsidy to buyers, since they want to affect consumption of the good. B. a subsidy to sellers, since they want more to be produced and offered for sale. C. a subsidy to buyers, since they deserve the benefit more than the producers. D. a subsidy on either buyers or sellers, since they will both have the same effect on the market.
According to the shortsightedness effect, politicians tend to favor projects with:
a. short-run benefits and short-run costs. b. short-run benefits and long-run costs. c. long-run benefits and short-run costs. d. long-run benefits and long-run costs.
The application of game theory to economics allows us to understand firm behavior in some forms of oligopoly. Game theory suggests that in a two-firm industry, each firm will
a. avoid pricing high when the other prices low b. select high prices and defend that selection because, in the long run, their profits are higher than if they competed by lowering prices c. end up mistaking the other's intentions, which results in low prices and low profit for both in the long run d. end up colluding with the other to form a cartel e. agree with the other not to allow other firms to enter the industry