Monopolists earn excessive profits by increasing their quantity produced above the competitive market outcome.
Answer the following statement true (T) or false (F)
False
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Kate and Alice are small-town ready-mix concrete duopolists. The market demand function is Qd = 20,000 - 200P, where P is the price of a cubic yard of concrete and Qd is the number of cubic yards demanded per year. Marginal cost is $80 per cubic yard. The Cournot model describes the competition in this market. How much more profit would a monopolist earn compared to the combined profit earned by the two duopoly firms together in the Nash equilibrium?
A. $180,000 B. $2,222.22 C. $11,111.11 D. $9,333.33
Which of the following is most representative of the functional finance view of the macroeconomy?
A. Budgets should be balanced. Doing otherwise is morally wrong. B. The government should decide on tax and spending plans based on their effects on the economy. C. The economy is self-regulating and the best thing the government can do to enhance stability is to stay out of the way. D. Crowding out almost completely cancels out any deficit spending, so fiscal policy is likely to be ineffective.
In the product markets, households
A. are the sellers of resources. B. are neither buyers nor sellers in the market. C. are the buyers of goods and services. D. none of these is correct.
The case for advertising includes the fact that
A. it wastes society's scarce resources. B. firms spend large sums of money to create meaningless differences among products. C. it creates wants that otherwise would not have existed. D. it provides consumers with valuable information about product availability, quality, and price.