Which would be a qualification to the view that oligopoly is evocatively and productively inefficient?
A. Less foreign competition has stimulated more price competition in oligopolies
B. Oligopolies are less technologically competitive so they lose market share
C. Oligopolies may purposely keep prices below short-run profit-maximizing levels to bolster barriers to entry
D. The more collusive practices of oligopolies lead to more profit-sharing among firms in the industry
C. Oligopolies may purposely keep prices below short-run profit-maximizing levels to bolster barriers to entry
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Based on the figure below. Starting from long-run equilibrium at point C, a tax increase that decreases aggregate demand from AD1 to AD will lead to a short-run equilibrium at point ________ and eventually to a long-run equilibrium at point ________, if left to self-correcting tendencies.
A. D; C B. D; B C. A; B D. B; C
List four sources of market failure
What will be an ideal response?
A business incurs the following costs per unit: Labor $5/unit; Materials $3/unit and rent $5000/month. If the firm produces 1000 units a month, the total variable costs equals
a. $5,000 b. $8,000 c. $13,000 d. $10,000
A firm will shut down in the long-run if
a. P>AVC
b. P