Suppose the local electrical utility, a legal monopoly based on economies of scale, was split into four firms of equal size, with the idea that eliminating the monopoly would promote competitive pricing of electricity. What do you anticipate would happen to prices?
A. The government would impose barriers to entry that protect prices
B. More competition would lead to lower prices
C. There would likely be no change in prices.
D. They would each have to raise prices to cover their higher costs.
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A dominant strategy is:
A. when one strategy is chosen by a firm first and determines the best strategies of the other players that follow. B. when one strategy is chosen and cannot be changed without making at least one of the players worse off. C. when one strategy is always the best for a player to choose, regardless of what other players do. D. None of these statements is true.
Suppose the price level falls. The result is that the:
a. aggregate supply curve would shift to the right. b. aggregate supply curve would shift to the left. c. general price level would rise causing a movement up the aggregate demand curve. d. aggregate demand curve would slope downward because of the real balances effect.
The price for labor is the wage rate. What happens to the quantity of labor supplied if wages increase?
a. It increases. b. It decreases. c. It does not change. d. Uncertain-economic theory has no answer to this question.
The labor force consists of:
a. people more than 20 years old and who are looking for work. b. people more than 16 years of age and older working or looking for work. c. all adults above 18 years of age with job skills. d. all working adults employed for more than forty hours a week.