An advertising race among oligopolists may be rational if it
A. is defense advertising.
B. raises entry barriers.
C. increases cost per unit of sales.
D. encourages new entrants.
Answer: B
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The most prevalent market structures in the U.S. economy are perfect competition and monopolistic competition
Indicate whether the statement is true or false
It costs a firm $80 per unit to produce product A and $50 per unit to produce B individually. If the firm can produce both products together at $140 per unit of product A and B, this exhibits signs of
a. Economies of scale b. Economies of Scope c. Diseconomies of Scale d. Diseconomies of Scope
The gains from specialization in international trade accrue strictly from the principle of absolute advantage
Indicate whether the statement is true or false
Aggregate demand will shift outward when there is/are
a. a decrease in government spending b. a decrease in incomes abroad c. a tax increase d. consumers deciding to buy more goods and services, even if prices remain unchanged e. the expectation that future income will fall