Describe the elasticity of demand that each of these gas stations faces
What will be an ideal response?
Each station's elasticity of demand is very high. When one station raises its price even a bit, it loses a lot of customers to its competitors. And when one of the stations lowers its price, it gains a lot of customers from its competitor.
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Political incumbents often gain or lose re-election because of a strong or weak economy. Which of the following is an exception to that rule?
A) Al Gore B) George H.W. Bush C) Jimmy Carter D) Herbert Hoover
If the price a consumer pays for a product is equal to a consumer's willingness to pay, then the consumer surplus relevant to that purchase is
a. zero. b. negative, and the consumer would not purchase the product. c. positive, and the consumer would purchase the product. d. There is not enough information given to answer this question.
Suppose duopolists face the market inverse demand curve P = 100 - Q, Q = q1 + q2, and both firms have a constant marginal cost of 10. If firm 1 is a Stackelberg leader and firm 2's best response function is q2 = (100 - q1)/2, at the Nash-Stackelberg equilibrium firm 2's output is
A) 30. B) 40. C) 60. D) 70.
The monopolist is always constrained by:
A. government regulation. B. his production capacity. C. the barriers to entry. D. the amount demanders are willing to buy at any given price.