Explain why under oligopoly conditions firms might wish to choose pricing and output strategies together. What is this arrangement called?
If firms can agree together about pricing and output strategies, they may be able to function in the market as a monopoly, thereby increasing the profits for all firms. This is called a cartel. Frequently cartels are short-lived because there is a strong incentive for individual firms to undercut the cartel price to increase their market share and their profits.
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The actual government budget deficit ________ be used to determine the effectiveness of discretionary fiscal policy actions because ________
A) cannot; it excludes non-discretionary spending changes B) can; it includes non-discretionary spending changes C) cannot; it includes non-discretionary spending changes D) can; it excludes automatic stabilization expenditures
Adverse selection is a problem that arises:
A. before the parties have entered into an agreement. B. after the parties have voluntarily entered into an agreement. C. either before or after the parties have entered into an agreement. D. rarely in any market.
If the world price of coffee is higher than Colombia's domestic price of coffee without trade, then Colombia
a. should import coffee. b. has a comparative advantage in coffee and should export coffee. c. should produce just enough coffee to satisfy domestic demand. d. should produce no coffee domestically.
In a market system, resources will move away from an industry when
What will be an ideal response?