Why does a firm in a competitive industry charge the market price?
a. If a firm charges less than the market price, it loses potential revenue.
b. If a firm charges more than the market price, it loses all its market power.
c. The firm can only sell limited number of units of output, so it wants to sell at the market price in order to lower its costs.
d. All of the above are correct.
a
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Advocates of steel tariffs to protect U.S. steel firms realize that when imposing such tariffs, the gains of firms are outweighed by the losses to consumers.. This implies that
A) such advocates value producer surplus more than consumer surplus. B) such advocates want to help consumers. C) such advocates value consumer surplus more than producer surplus. D) such advocates value producer surplus and consumer surplus equally.
How much would be added to this year's GDP if you sold your four-year-old automobile for $4,000 and purchased a two-year-old model from an acquaintance for $10,000
a. nothing b. $6,000 c. $10,000 d. $14,000
The merger of two firms selling close substitutes may lead to higher prices.
Answer the following statement true (T) or false (F)
Sometimes unions can raise wages above what productivity increases would permit. When this happens, we can be sure that
A) the employment of union workers is increasing. B) some union workers end up losing their jobs. C) there is a redistribution of income from union workers to nonunion workers. D) featherbedding will occur.