A perfectly competitive, increasing cost industry is initially in long run equilibrium. Then, there is an increase in demand. Compared with the initial equilibrium, once the new long run equilibrium is reached:
a. price will be higher and total output will be greater than before
b. price will be the same and total output will be greater than before.
c. price will be lower and total output will be greater than before.
d. price will be higher, and therefore total output will be smaller than before.
a
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What will be an ideal response?
Kate and Alice are small-town ready-mix concrete duopolists. The market demand function is Qd = 20,000 - 200P, where P is the price of a cubic yard of concrete and Qd is the number of cubic yards demanded per year. Marginal cost is $80 per cubic yard. The Cournot model describes the competition in this market. What is the amount of the deadweight loss?
A. $8,888.89 B. $2,222.22 C. $1,333,33 D. $4,444.44
Which of the following is a true statement about signaling games?
a. In a separating equilibrium, the second mover's posterior beliefs are the same as his priors. b. In a separating equilibrium, Bayes' rule cannot be used to compute posterior beliefs (because it produces an undefined answer). c. In a pooling equilibrium, both the first and second movers choose the same action. d. In a pooling equilibrium, the second mover learns nothing from the first mover's action.
"People who make more money should pay higher taxes" is an example of
a. the benefits principle. b. horizontal equity. c. vertical efficiency. d. the ability-to-pay principle.