"Because firms in an oligopoly are so large, they do not need to consider each other's actions." Is the previous statement correct or incorrect? Explain your answer
What will be an ideal response?
The statement is incorrect. Oligopoly is an industry in which only a few firms compete. Because there are only a few firms, the hallmark of oligopoly is mutual interdependence, that is, one firm's action will affect the other firms. The fact that in oligopoly each firm's actions affect its rivals is unlike the case in perfect competition or monopolistic competition, in which there are so many firms that one firm's actions have no effect on its rivals, or monopoly, in which there is only one firm and hence no rivals.
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Suppose foreigners find U.S. goods and services more desirable for some reason other than a change in the exchange rate. Which policies could be used to offset the resulting change in output?
a. an increase in the money supply and an increase in government purchases. b. an increase in the money supply and a decrease in government purchases. c. a decrease in the money supply and an increase in government purchases. d. a decrease in the money supply and a decrease in government purchases.
Refer to Table 21.3 below:Table 21.3Units of LaborUnits of OutputMPP00 1 30266 3 304116 How many units of output can be produced when three units of labor are employed in Table 21.3?
A. 66. B. 30. C. 96. D. 31.
To combat the financial crisis and recession which began in 2007, governments worldwide made it:
A. easier for firms and households to borrow money for investment and consumer goods. B. easier for other countries to borrow money for infrastructure projects. C. easier for firms to pay their taxes by providing a tax amnesty. D. easier for workers to purchase health insurance through their employers.
Suppose the short-run production function is q = 10 ? L. If the wage rate is $10 per unit of labor, then AVC equals
A) q. B) q/10. C) 10/q. D) 1.