The practice of price discrimination is associated with pure monopoly because:
A. most monopolists sell differentiated products.
B. it can be practiced whenever a firm's demand curve is downsloping.
C. monopolists have the ability to control both output and price.
D. monopolists usually realize economies of scale.
Answer: C
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If resale price maintenance leads to a shift in the market demand that equals the shift in the market supply, the quantity of the good sold will ________ and the manufacturer's profit will ________.
A) increase; not change B) not change; not change C) decrease; decrease D) not change; decrease
What is the Nash equilibrium of this one-shot game?
a. Firm A will charge a lower price and firm B will charge a lower price b. Firm A will charge a higher price and firm B will charge a lower price c. Firm A will charge a lower price and firm B will charge a higher price d. Firm A will charge a higher price and firm B will charge a higher price
In the long run, price elasticities of demand are usually ____
a. less than they are in the short run because people can adjust b. the same as they are in the short run because tastes don't change c. greater than they are in the short run because prices rise over time d. less than they are in the short run because real prices fall over time e. greater than they are in the short run because consumers have time to adjust
Which of the following statements is positive?
A. When the Federal Reserve increases the money supply, interest rates decrease. B. Large budget deficits should be avoided. C. A tax cut that benefits low-income households is acceptable. D. Higher taxes are needed to support education.