What are the main characteristics that make it more likely for a cartel to enforce agreements among participating members?
What will be an ideal response?
A cartel is more effective in enforcing agreements if there are a small number of firms, relatively homogeneous products, easily observable prices, and little variation in prices.
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If unemployment is below the natural rate, GDP is below potential output
a. True b. False
Big Ol’ Robots is a family company that has been in business for more than 15 years. The company has decided to incorporate. What will this mean for the ownership of the firm?
a. The corporation will be owned by its shareholders. b. The company’s owners will reinvest profits to obtain more capital. c. Venture capitalists will own a significant stake in the company. d. The original owners will step down and no longer be part of the company.
If only a small percentage of used computers on the market are plums (high-quality), then the asymmetric information concerning the quality of used computers has generated a ________ market.
A. thin B. weak C. tight D. competitive
Which of the following is not a potential drawback to public provision of public goods?
a. Public provision lacks clear signals about the value of the good being produced, possibly leading to under and over provision of the goods. b. Many collective consumption goods might be overproduced private goods. c. Public provision often implies taxation, which creates an excess burden that might overwhelm any efficiency gains. d. Many collective consumption goods are really impure private goods and thus the efficient level of output is never reached.