For a market with a linear demand curve and constant marginal cost of production, why are the reaction functions for the Cournot duopoly sellers also straight lines?
A) The reaction functions do not have to be straight lines, and they are only drawn this way in the book to keep the figures simple.
B) Cournot thought the lines would be straight, but this was proven wrong by other economists.
C) Marginal revenue is always linear when marginal costs are constant.
D) We know that the marginal revenue curves for linear demand curves are also straight lines.
D
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An economic model
a. always has a mathematical foundation b. can never be proven wrong c. can be constructed for an individual economic unit but not for the economy as a whole d. is a simplification of the real world e. can be constructed for the economy as a whole but not for an individual economic unit
In what way is the result of an excise tax imposed on either demanders or suppliers similar to the result of a price floor?
a. The amount that consumers pay for the good will be less than they previously paid b. The amount of the good that will be traded in the market will be greater than previously traded c. both price floors and excise taxes create excess demand d. The amount that consumers pay for the good will be greater than they previously paid e. Both price floors and excise taxes create excess supply
Tangible items that are longer lived are called ______.
a. nondurable services b. durable services c. nondurable goods d. durable goods
Suppose a country with a fixed exchange rate decides to reduce the price of its currency. This change in policy is called
A) an appreciation. B) a depreciation. C) a peg. D) a devaluation. E) a revaluation.