_________ arises when firms act together to reduce output and keep prices high.
A. An oligopoly
B. Collusion
C. A cartel
D. A monopoly
Answer: B. Collusion
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A firm raises the price it charges. The firm's total revenue decreases. What can we conclude about the price elasticity of demand?
A) Demand is elastic. B) Demand is unit elastic. C) Demand is inelastic. D) Demand is perfectly inelastic. E) Not enough information is given to conclude anything about price elasticity of demand.
The textbook rejects the cost-plus-markup theory of price setting because
A) business firms do not describe their price-setting procedures as cost-plus procedures. B) competitors and monopolists set prices in different ways. C) it cannot explain the prices we actually observe. D) it ignores the role of government in regulating prices. E) no single theory can explain all price-setting.
When a firm is operating at its minimum efficient scale, its short-run average total cost of production is minimized
a. True b. False
Suppose the price level increases by 5 percent and the nominal wages of workers increase by 3 percent during a particular year. This implies that the real wage has: a. declined by 2 percent
b. declined by 8 percent. c. also increased by 2 percent. d. also increased by 8 percent. e. remained constant.