If two firms use a tit-for-tat scheme to maintain cartel pricing, and one firm chooses a low price in the current time period, then:
A. that firm will also choose a low price in the next time period.
B. that firm will also choose a high price in the next time period.
C. the other firm will choose a low price in the next time period.
D. the other firm will choose a high price in the next time period.
Answer: C
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Firms that anticipate hold-up, choose organizational or contractual forms
a. To give each party both the incentive to make relationship-specific investments b. To give each party both the incentive to ignore sunk costs c. To give each party both the incentive to reduce investments in reputation d. To give each party both the incentive to make non-specific investments
The horizontal summation of all individual demands at different given prices results in the:
A. market supply curve. B. market demand curve. C. individual demand curve. D. equilibrium demand and supply curves.
Suppose that initially, demand is given by the equation Qd = 48 ? 4P. If, as a result of an increase in income, the quantity demanded increases by 12 at every price, the new demand equation would be:
A. Qd = 48 ? 16P. B. Qd = 48 ? 8P. C. Qd = 60 ? 4P. D. Qd = 36 ? 4P.
Which of the following is the largest contributor to the growth of labor productivity in the United States?
A. Technological advance. B. Education and training of labor. C. Economies of scale. D. Improved resource allocation.