What is a cartel? What are the advantages of cheating in a cartel?
A group of firms that collude to produce the monopoly output level and sell at the monopoly price is called a cartel. Even when oligopolistic firms recognize that they would benefit as a group by acting like a monopoly, each individual firm is tempted to produce just a slightly higher quantity and earn slightly higher profit—while still counting on the other firms to hold down production and keep prices high. The firm that cheats receives a higher profit because it gains all of the increase in revenue from the increase in the number of units sold but suffers only a fraction of the loss caused by the lower product price.
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Under a gold standard, a continual balance of surplus in any country can be sustained only as long as the country's gold reserves hold out
Indicate whether the statement is true or false
The velocity of money is assumed to be constant in the Classical model because
A) the payment habits of the community. B) fixed level of real GDP. C) the demand for money varies with the level of real output. D) aggregate demand is constant.
Use the above figure. For this monopolistic competitor, which of the following is INCORRECT?
A) The profit-maximizing rate of output is qe, and the profit-maximizing price is P. B) The demand curve shows a direct relationship between price and quantity demanded. C) The profit-maximizing rate of output is at E, where MR intersects MC. D) A downward sloping marginal revenue curve that is below the demand curve.
When a price ceiling is imposed in a market,
a. a persistent shortage results b. a persistent surplus results c. sellers of the product are made better off d. no one is made better off e. quantity supplied is greater than the quantity demanded