The rational expectations hypothesis assumes that individuals will
a. never make forecasting errors.
b. be as likely to overestimate as to underestimate the future rate of inflation.
c. continually make systematic forecasting errors.
d. ignore past forecasting errors when formulating predictions.
B
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Figure 11-6
At its optimal output level, the profit-maximizing monopolist in Figure 11-6 will earn a profit equal to
A. zero. B. (P2? P3)Q. C. P > Q. D. (P5? P6 )Q.
If this firm produced at its most efficient output level it would produce about _______ units.
A. 40
B. 50
C. 60
D. 70
Consider a market consisting of two firms where the inverse demand curve is given by P = 500 ? 2Q1 ? 2Q2. Each firm has a marginal cost of $50. Based on this information, we can conclude that aggregate quantity in the different equilibrium oligopoly models will follow which of the following orderings?
A. QBertrand < QCollusion < QCournot < QStackelberg B. QBertrand < QStackelberg < QCournot < QCollusion C. QCollusion < QCournot < QStackelberg < QBertrand D. QCollusion < QStackelberg < QCournot < QBertrand
The firm's short-run supply curve shows the relationship between the price of a good and the:
A. quantity demanded of that good. B. quantity supplied of that good. C. willingness of consumers to purchase the good. D. firm's capacity output.