Why does entry into markets decrease firm profits?
What will be an ideal response?
Three reasons: 1) the market price drops; 2) the quantity produced by each firm decreases; and 3) entry may cause average cost per unit to increase.
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Kate and Alice are small-town ready-mix concrete duopolists. The market demand function is Qd = 20,000 - 200P where P is the price of a cubic yard of concrete and Qd is the number of cubic yards demanded per year. Marginal cost is $80 per cubic yard. Suppose Kate enters the market first and chooses her output before Alice. What is Kate's profit?
A. $10,000 B. $5,000 C. $20,000 D. $15,000
The Fisher effect ________
A) comes from combining the Fisher equation and the classical dichotomy B) predicts that in the long run nominal rates will rise with increases in expected inflation C) shows that in high inflation we typically see high nominal interest rates D) all of the above E) none of the above
Product% Change in Income% Change in Quantity DemandedW-1-1X+6+3Y-1+1Z+4+8Refer to the table above. Which product is a normal good but least responsive to a change in income
A. Product W B. Product X C. Product Y D. Product Z
If the Congress passes legislation to increase government spending to counter the effects of a recession, then this would be an example of a(n):
A. expansionary fiscal policy. B. supply-side fiscal policy. C. nondiscretionary fiscal policy. D. contractionary fiscal policy.