When an airline reduces its fares, other airlines typically match the action. But when an airline increases its fare, other airlines do not follow suit. Which oligopoly model cartel, price leadership, or kinked demand best fits the airline industry as described? Justify your choice and explain why the other models are less appropriate.
What will be an ideal response?
The interdependence fits the kinked demand model, where firms match price cuts but not price increases. With cartels, firms agree on price and market share; there is no discussion of firms not matching price increases or decreases. With price leadership, one firm sets price and others follow, whether up or down.
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In the economy of Briskland, the commercial banks have deposits of $500 billion. Their reserves are $50 billion, 80 percent of which is in deposits with the Central Bank
There is $20 billion in Central Bank notes outside the banks, and there are no coins. a) What is the monetary base? b) If all the deposits are money, what is the total quantity of money? c) What is the banks' reserve ratio? d) What is the currency drain as a percentage of the quantity of deposits?
Consider a country that produces only two goods: pineapples and tractors. Suppose it is possible for this country to increase its production of pineapples without producing fewer tractors. In this case, its current output combination is inefficient
Indicate whether the statement is true or false
Which of the following is not a reason people choose to depend on others for goods and services?
a. to improve their lives b. to allow them to enjoy a greater variety of goods and services c. to consume more of each good without working any more hours d. to allow people to produce outside their production possibilities frontiers
The Phillips curve reflects the relationship between
A. the price level and inflation. B. inflation and real GDP. C. unemployment and inflation. D. unemployment and real GDP.