According to the Lucas supply function, if a firm mistakenly perceives that all prices are going up because its own output price is going up, it will
A. increase its production.
B. keep its production level constant.
C. increase expectations regarding its own output price.
D. decrease its production.
Answer: B
You might also like to view...
Why is there a price markup over marginal cost in monopolistic competition?
What will be an ideal response?
Which of the following is the outcome of the lemons problem in the used-car market?
A) Only low-quality cars will be traded in the market. B) Only high-quality cars will be traded in the market. C) Both low-quality and high-quality cars will be traded in the market. D) No cars will be traded in the market.
Collusion and cartels are frequently legal in Europe
a. True b. False
An individual seller's producer surplus on a unit of a good is
a. zero in perfect competition b. zero in monopoly c. greater than the buyer's consumer surplus on that unit d. an example of a side payment e. the difference between the price the seller receives and the cost of producing that unit.