With a linear inverse demand function and the same constant marginal costs for both firms in a homogeneous product Stackelberg duopoly, which of the following will result?
A. QL = 2QF.
B. Profits of leader > Profits of follower.
C. Profits of leader > Profits of follower and QL = 2QF.
D. PL > PF.
Answer: C
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For a price ceiling to have an impact on a market it:
A. must be set above the equilibrium price. B. must be set below the equilibrium price. C. must be set at the equilibrium price. D. can lead more goods to be produced in a market.
Consider a good with a price elasticity equal to 1 at every point on its demand curve. Which of the following statements is correct?
a. Total revenue always rises exactly in proportion to a drop in the price. b. Total revenue always rises exactly in proportion to a rise in the price. c. Total revenue does not change if the price changes. d. Total revenue drops to zero whenever the price rises. e. Total revenue always doubles if the price drops.
The production possibilities frontier for a country is usually drawn
a. as a straight line, sloping downward. b. as a straight line, sloping upward. c. bowed outward from the origin. d. bowed inward toward the origin. e. as a dotted line when sloping downward and as a full line when sloping upward.
________ arises when people realize they will still receive the benefits of a good whether they pay for it or not.
A. The free-rider problem B. Logrolling C. The drop-in-the-bucket problem D. The voting paradox