A firm acting as a price leader would never reduce market price because this would clearly make all of the firms in the market worse off and defeat the purpose of having a firm act as the price leader
Indicate whether the statement is true or false
FALSE
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When businesses cooperate and agree to hold prices high, it is called ____________, and when they reach a noncooperative equilibrium it is called _______________.
A. collusion; competition B. competition; collusion C. commitment strategy; collusion D. collusion; commitment strategy
What does it mean to say that a perfectly competitive firm is a price taker? Can't a firm set any price it chooses?
What will be an ideal response?
Assume the economy is in short-run equilibrium at a real GDP below its potential real GDP. According to Keynesian theory, which of the following policies should be followed?
a. The Federal Reserve should increase the money supply b. The federal government should increase spending. c. The federal government should do nothing because the economy will self correct to potential real GDP. d. All of the above.
Suppose the market for grass seed can be expressed as Demand: QD = 100 - 2p Supply: QS = 3p If government imposes a 10% ad valorem tax to be collected from sellers, what is the price consumers will pay? How much tax revenue is collected?
What will be an ideal response?