Exhibit 9-6 Two-Firm Payoff Matrix
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Assume costs are identical for the two firms in Exhibit 9-6. If both firms were allowed to form a cartel and agree on their prices, equilibrium would be established by:
A. Widget Co. charging the low price and Ajax Co. charging the high price.
B. Widget Co. charging the high price and Ajax Co. charging the low price.
C. Widget Co. charging the low price and Ajax Co. charging the low price.
D. Widget Co. charging the high price and Ajax Co. charging the high price.
Answer: D
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If the government wanted a tax to reduce the quantity exchanged a large amount but not raise much in tax revenue, it would want to tax an industry with
a. elastic supply and demand curves. b. inelastic supply and demand curves. c. inelastic supply and elastic demand. d. elastic supply and inelastic demand.
Which of the following is antitrust legislation?
A. Lanham Act B. Securities and Exchange Act C. Sherman Act and Lanham Act D. Sherman Act
A perfectly elastic demand curve
A. has a slope of -1. B. shows that a slight change in income will lead to a large reduction in price. C. shows that a slight increase in price will reduce quantity demanded to zero. D. is a vertical line drawn across from the quantity axis.
A new fertilizer which greatly improves the corn crop yield is being widely used by corn farmers. You accurately predict that this
A. will shift the supply curve of corn to the left, the equilibrium price of corn will increase, and the demand for corn will fall. B. will shift the supply curve of corn to the left, the equilibrium price of corn will increase, and the quantity demanded of corn will decrease. C. will shift the supply curve of corn to the right, the equilibrium price of corn will increase, and the demand for corn will fall. D. will shift the supply curve of corn to the right, the equilibrium price of corn will decrease, and the quantity demanded of corn will increase.