Refer to the table below. Suppose the perfectly competitive market for dairy products had a 40 percent chance of a high price of $3.00 and a 60 percent chance of a low price of $2.00. However, both Happy Cows and Free Cows have revised their probabilities and now believe that the probability of a high price of $3.00 is 80 percent and the probability of a low price of $2.00 is 20 percent. If the
managers of Free Cows want to maximize expected profit based on the new probabilities by how much will they change the quantity produced?
Happy Cows and Free Cows are two separate perfectly competitive dairy farms. The table above shows the respective firms' marginal cost at various production levels.
A) Free Cows will increase their production by 40 units.
B) Free Cows will decrease their production by 40 units
C) Free Cows will decrease their production by 20 units.
D) Free Cows will increase their production by 20 units.
D) Free Cows will increase their production by 20 units.
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A bilateral negotiation is a bargaining mechanism in which:
A) a third party or an authority intervenes and decides the prices of the products traded in a market. B) a single seller and a single buyer confront one another with bids and asks. C) multiple buyers bargain with a single seller to determine the trading price. D) multiple sellers bargain with a single buyer to determine the trading price.
Campaign finance reform is usually proposed
a. as a way of reducing the power of special-interest groups b. as a form of rent seeking c. by economists as a way of implementing the median voter model d. by political action committees e. by the Justice Department
An economic model is a realistic depiction of the operation of the economy.
Answer the following statement true (T) or false (F)
As price rises, quantity supplied
A. rises. B. falls. C. remains the same.