An agreement between the dominant firm and the fringe members to keep output low often breaks because:
a. the fringe firms usually appropriate a larger share of the profits.
b. the agreement is not self enforcing.
c. the dominant firm usually appropriates a larger share of the profits.
d. both have an incentive to charge a higher price for their output.
B
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Use the figure below to answer the following question.
The diagram concerns supply adjustments to an increase in demand (D1 to D2) in the immediate period, the short run, and the long run. In the immediate period, the increase in demand will
A. increase equilibrium quantity but not equilibrium price. B. increase equilibrium price but not equilibrium quantity. C. increase both equilibrium price and quantity. D. have no effect on either equilibrium price or quantity.
Asymmetric information refers to a situation where people who pose the greatest risk to insurers are the ones who buy insurance
Indicate whether the statement is true or false
The following is not an example of adverse selection
a. you lock your garage when you have expensive workshop tools b. you are less careful when you buy a more expensive car c. Individuals tend to gamble more with their money when the future is certain d. you only go swimming when the lifeguard is on duty
During the decade of the 1980s our Lorenz curve
A. moved inward, toward the line of perfect equality. B. moved outward, away from the line of perfect equality. C. stayed about the same distance from the line of perfect equality. D. crossed the line of perfect equality.