The existence of economies of scale is one reason oligopolies exist because
A) a firm is able to increase price leading to increased profits.
B) the marginal cost decreases as output increases.
C) of strategic dependence.
D) as output increases average total cost decreases leading to large-scale firms.
Answer: D
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Based on the figure below. Starting from long-run equilibrium at point C, a tax increase that decreases aggregate demand from AD1 to AD will lead to a short-run equilibrium at point ________ and eventually to a long-run equilibrium at point ________, if left to self-correcting tendencies.
A. D; C B. D; B C. A; B D. B; C
Foreign direct investment is when:
A. a firm runs part of its operation abroad or invests in another company abroad. B. investors buy foreign financial assets like stocks, bonds, or government securities. C. investment is funded by foreign sources but operated domestically. D. when a foreign government directly invests into a firm.
According to the Lucas supply function, if the expected price level is larger than the actual price level
A. real output increases. B. real output decreases. C. nominal output decreases. D. nominal output increases.
Any mechanism by which buyers and sellers negotiate an exchange is a
A. market. B. negotiable instrument. C. brokerage. D. corporation.