Suppose Cournot duopolist firms operate with each having a cost of 30qi (i = 1,2 ) so that each firm's marginal cost is 30. The inverse market demand curve is P = 120 - Q where Q = q1 + q2. Suppose there were no barriers to entry and firms continued to enter so long as there were positive economic profits. At the Nash-Cournot equilibrium, the price, P, is
A) 30.
B) 45.
C) 60.
D) 90.
A
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The perfectly competitive market structure benefits consumers because
A) firms add a much smaller markup over average cost than firms in any other type of market structure. B) firms produce high-quality goods at low prices. C) firms do not produce goods at the lowest possible price in the long run. D) firms are forced by competitive pressure to be as efficient as possible.
Big Roads and Big Pavers are two competing road construction firms. The managers of these two firms should never undertake all of the following actions except which one?
A) agree to submit a high bid on a contract B) agree to submit a low bid on a contract C) agree to the number of contracts the firms will bid on D) share information and experiences from implementing new government safety standards
The slope of a budget line: a. is the negative of the price ratio, -PX/PY b. depends on income
c. depends on preferences. d. is positive.
A price ceiling established below the market clearing price will usually cause
A) nonprice rationing. B) an excess supply. C) no change in the market clearing price. D) a decrease in the market clearing price.