An economy with an expansionary gap will, in the absence of stabilization policy, eventually experience a(n) ________ in the inflation rate, leading to a(n) ________ in output.
A. decrease; increase
B. increase; increase
C. decrease; decrease
D. increase; decrease
Answer: D
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Oligopolistic firms
A. pay close attention to the actions of their rival firms. B. are so few in number that at least one firm has some control over price. C. charge a price that is higher than its ATC. D. All of the choices are true.
The threat of punishment in a repeated game tends to:
A. reduce the incentive to break a pricing agreement. B. anger the other firms, resulting in a price war. C. maintain prices at the duopoly price level. D. deter entry.
If the market price is $40, the average revenue of selling five units is
A) $8. B) $20. C) $40. D) $200.
Refer to the data below. Over which price range is the demand inelastic?
A. $20-$18
B. $18-$16
C. $14-$12
D. $8-$6