When firms set prices by adding a fixed percentage markup to marginal costs, they are likely
A) concerned with the rate of profit rather than its net amount.
B) earning a satisfactory rather than a maximum profit.
C) exploiting their customers.
D) poorly managed.
E) searching for the most advantageous prices to set on the basis of limited information.
E
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There are two players in a game. At each round of the game, one player has to trust the other for a particular task. In the first round, Player 1 has to decide whether he will trust Player 2
If he does not trust Player 2, he will get one-third of the prize money, while Player 2 will get the rest of the prize money. If he trusts Player 2, Player 2 can either cooperate with him or defect. If Player 2 defects, Player 1 will earn $0, while Player 2 will get the entire prize money. If Player 2 cooperates, each of them will get half the prize money. What will the equilibrium outcome of this game be if Player 1 can impose a guilt penalty of two-thirds of the prize money and is known to be a vengeful player?
If firms are producing at a profit-maximizing level of output where the price exceeds the average total cost:
A. accounting profits must be positive, but economic profits are zero. B. economic profits must be positive. C. other firms will exit the market. D. firms will exit the market.
According to the graph shown, if Q2 units are being produced, this monopolist:
This graph shows the cost and revenue curves faced by a monopoly.
A. is earning negative economic profits.
B. is earning positive economic profits.
C. is earning zero economic profits.
D. may be earning zero accounting profits.
To an economist, freeway congestion is a sign that the price to drive on the freeway is
A) below its equilibrium level. B) at its equilibrium level. C) above its equilibrium level. D) either a or c E) none of the above