According to the contestable market model, if there are no barriers to entry or exit, the price an oligopolist sets will provide no economic profits in the long run.
Answer the following statement true (T) or false (F)
True
If a market is contestable, an oligopolist will set a price that discourages entry by other firms and establishes a price to break even and hence prevent entry.
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When considering the interplay of the price and quantity effect of different tax levels, we realize that:
A. there is one tax level that maximizes tax revenues. B. tax revenues will continue to increase at all levels where the price effect outweighs the quantity effect. C. tax revenues will continue to decrease at all levels where the quantity effect outweighs the price effect. D. All of these statements are true.
The quantity of newspapers sold will decline if
a. newsprint becomes more expensive. b. the printers' union makes wage concessions. c. prices are reduced. d. magazine prices rise.
Economic profit is equal to the difference between:
A) total revenue and the full opportunity cost of all the resources used in production. B) total revenue and implicit costs. C) accounting profit and explicit costs. D) implicit and explicit costs.
Supply-side economists argue that decreasing marginal tax rates
A) increases productivity and shifts the AS curve to the right. B) increases productivity and shifts the AS curve to the left. C) increases productivity and shifts the AD curve to the left. D) due to the Ricardian equivalence, has no impact on the economy.