The above figure depicts the Edgeworth box for two consumers, Al and Bruce. Explain why point "a" cannot be a competitive equilibrium
What will be an ideal response?
Point "a" cannot be a competitive equilibrium because at point "a", Al and Bruce each have a different marginal rate of substitution. Since they both face the same prices in a competitive market, at least one of them is not in equilibrium.
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Unemployment caused by people voluntarily leaving their jobs is classified as
A) part-time unemployment. B) cyclical unemployment. C) frictional unemployment. D) seasonal unemployment.
When external costs are present and government imposes a tax equal to the external marginal cost, then efficiency can be achieved
Indicate whether the statement is true or false
Because firms selling a homogeneous product set price in response to the (perceived) pricing decision of other firms in the Bertrand Model of oligopoly in equilibrium price exceeds marginal cost
Indicate whether the statement is true or false
Under a rule of reason approach, which of the following would be legal in the United States?
a. The merger of two small companies in an unconcentrated market. b. Price fixing between IBM and Compaq. c. The merger between Ford and General Motors. d. Kellogg's and General Mills collude to drive Quaker Oats out of the business. e. Exxon Oil and Mobil Oil elect the same person to their boards of directors.