An effective agreement to divide up the market among firms selling products that are close substitutes
A) allows each firm to earn positive net revenue even though its marginal cost is greater than its marginal revenue.
B) allows each firm to earn positive net revenue by preventing cooperation from reducing each firm's marginal revenue below its marginal cost.
C) tends to keep each firm's price and marginal revenue above its marginal cost.
D) tends to result in both higher prices and larger output.
C
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Starting from long-run equilibrium, the long-run impact(s) of an increase in autonomous consumption, compared to the original equilibrium, is:
A. higher inflation and the same output. B. lower inflation and the same output. C. lower inflation and lower output. D. higher inflation and higher output.
Refer to Figure 12-18. Use the figure above to answer the following questions
a. How can you determine that the figure represents a graph of a perfectly competitive firm? Be specific; indicate which curve gives you the information and how you use this information to arrive at your conclusion. b. What is the market price? c. What is the profit-maximizing output? d. What is total revenue at the profit-maximizing output? e. What is the total cost at the profit-maximizing output? f. What is the profit or loss at the profit-maximizing output? g. What is the firm's total fixed cost? h. What is the total variable cost? i. Identify the firm's short-run supply curve. j. Is the industry in a long-run equilibrium? k. If it is not in long-run equilibrium, what will happen in this industry to restore long-run equilibrium? l. In long-run equilibrium, what is the firm's profit maximizing quantity?
Regarding government manipulation of the interest rate, all of these statements are correct, except
A. to address business fluctuations, governments may reduce interest rates to induce people to borrow. B. such manipulations may give little thought to the effects on resource allocation between present and future. C. economists agree with the concept of using of interest rates to allocate resources among different time periods. D. generally, the price system reflects public preference between present and future resource allocation.
A monopolist in the radio industry has two radio-making plants. The marginal cost of radio production by Plant A is $4Q (where Q is the number of radios produced) and the marginal cost of radio production by Plant B is always $16. If the demand curve for radios is downward sloping, the monopolist will
A. never produce radios at Plant A. B. always produce four times as many radios at Plant B as at A. C. never produce more than four radios at Plant A. D. produce radios at Plant A only as a last resort.