Sail Away is competing in the sailboat market with Best Sails. Sail Away drops its price below its cost and, in doing so, drives Best Sails out of the market. Once Sail Away is a monopoly, they raise their price and enjoy economic profit. This is an example of ________.
A) market division
B) output restrictions
C) resale price maintenance
D) predatory pricing
D) predatory pricing
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Refer to A Negative Externality Problem. Suppose there is no attempt to internalize the externality. Pigovian analysis indicates that the externality creates a deadweight loss equal to
Demand for a good is given by Q = 100 - P. The private marginal cost of production is MCP = 10 + Q. There is a $10 per unit negative production externality in this situation. a. MCS = 10 + Q b. MCS = Q c. MCS = 20 + Q d. MCS = 10 + 10Q
Other things being equal, an increase in the supply of money
A) reduces the amount of money balances. B) reduces aggregate demand. C) generates significant changes in relative prices. D) increases the price level.
In the above figure, suppose the economy is in short-run equilibrium at point D. Which of the following is the best policy option for the Fed?
A) Increase taxes. B) Increase the required reserve ratio. C) Increase government spending. D) open market purchase of government securities
A unique resource can serve as
A) an economic profit B) a sunk cost C) an entry barrier D) none of these choices