Is it likely that oligopolistic firms will be in both a kinked demand curve situation and also engage in price leadership? Why or why not?
What will be an ideal response?
No, it is not. The models are not compatible in their assumptions. Specifically, price leadership assumes that rivals will follow a price increase, while the kinked demand curve model assumes that rivals will not follow such a lead. Because of the incompatibility, it is impossible for an oligopoly to conform to both models at the same time.
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In what way is better protection of the environment a possible result of successful development?
What will be an ideal response?
When choosing the right amount of a public good to supply, the government often:
A. provides too much, because people have an incentive to understate a good's value. B. fails to provide it, because people have an incentive to understate a good's value. C. provides too little, because people have an incentive to overstate a good's value. D. guesses, because people have an incentive to overstate a good's value.
The short-run individual firm's supply curve is made up of the zero-profit equilibrium levels of output as the industry expands due to entry.
Answer the following statement true (T) or false (F)
The price of oil falls.
Describe the effect on the AD curve, the SRAS curve, and the LRAS curve.