Explain why very few of the many international commodity cartels that have been formed since World War I have survived.
What will be an ideal response?
POSSIBLE RESPONSE: Increased production of the product (or of close substitutes) by non-cartel producers increased the price elasticity of demand, which forced a lowering of the price of the commodities. In addition, such cartels in the past did not control large enough shares of world production, and over time the cartel shares of their markets fell. The incentive to cheat under these cartels was also very high. All these factors led to the erosion of most of the cartels formed since the First World War.
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Average fixed cost can be calculated using any of the formulas below except
A) TFC/Q. B) (TC/Q) - AVC. C) ?(TC - VC)/?Q. D) (TC - VC)/Q.
Because government services are not sold in markets,
A) they are excluded from measurements of GDP. B) the government tries to estimate their market value and uses this to measure the government's contribution to GDP. C) they are valued at their cost of production. D) taxes are used to value their contribution.
Which of the following statements is false?
A. The recession of 2001 was mild. B. Output in the United States fell by about one-half between 1929 and 1933. C. The inflation rate declined during the Eisenhower and Reagan administrations. D. None of these statements are false
Which of the following is a reason to study economics?
A. Economic analysis explains daily events. B. It helps us understand why people, firms and government behave in a certain way. C. We need to understand relevant economic applications and policy issues. D. It provides useful logic for solving complex problems. E. All of these