Suppose Acme and Mega produce and sell identical products and face zero marginal and average cost. Below is the market demand curve for their product.
Suppose Acme and Mega decide to collude and work together as a monopolist with each firm producing half the quantity demanded by the market at the monopoly price. If Mega cheats on the agreement by reducing its price to $1 while Acme continues to comply with the collusive agreement, then Mega will then sell ________ units and Acme will sell ________ units.
A. 100; 0
B. 150; 50
C. 150; 0
D. 100; 50
Answer: C
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A profit-maximizing firm will hire additional units of labor until
A) the additional cost of hiring the last worker equals the additional revenue generated by that worker. B) the additional cost of hiring the last worker equals the marginal factor cost of the worker. C) the extra revenue from hiring the last worker equals the marginal physical product of labor. D) the extra cost from hiring the last worker equals the cost of the product.
Which of these is a drawback of forming an internal reference group and using the group average to assess normal performance?
A. Explicit employee collusion that tends to hold down the benchmark. B. Shirking among supervisors. C. Forced distributions D. High influence cost incurred by employees
If output falls, which of the following could be an explanation?
a. a rise in the interest rate b. a fall in foreign income c. a decline in government spending d. a rise in the interest rate, a fall in foreign income, or a decline in government spending
Which of the following integration types aims at reducing transaction costs?
A. Cointegration B. Vertical integration C. Conglomerate integration D. Horizontal integration