An oligopolistic price leader increases the price of its product. If all other firms follow the leader's example, the price leader will:
A. decrease its price.
B. maintain its new price.
C. increase its price.
D. increase its quantity of output.
Answer: B
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Monopolistic competition is similar to monopoly in that: a. firms face perfectly elastic demand curves
b. firms sell products for which there are no close substitutes. c. there is relatively free entry and exit. d. firms have some influence over the product price.
The Fed could conduct an open market purchase to eliminate an inflationary gap.
a. true b. false
A market in which the entire demand for a good or service can be satisfied at the least cost by a single firm is a:
A. horizontal market. B. natural monopoly. C. contestable market. D. perfect market.
In the standard model of pure competition, a profit-maximizing firm will shut down in the short run if:
A. Marginal cost is greater than average revenue B. Average cost is greater than average revenue C. Average fixed cost is greater than average revenue D. Total revenue is less than total variable cost