Market power is the power to:
A. control prices.
B. gain another firm's customers.
C. reduce price below cost to deter entry.
D. control output.
Answer: A
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U-4, U-5 and U-6 are
A) all broader measures of the unemployment rate. B) all narrower measures of the unemployment rate. C) not used by the Bureau of Labor Statistics because they include too much variability. D) narrower measures of the labor force participation rate. E) broader measures of the labor force participation rate.
Suppose the U.S. interest rate is 6 percent and the world interest rate is 5 percent. The U.S. interest differential is
A) -1 percent. B) 1.2 percent. C) 1 percent. D) -0.83 percent.
In a recent court case, an expert witness defined a monopoly as a firm that can "raise price without reducing its total revenue"
What does this imply about the elasticity of demand? Would this definition hold for a profit-maximizing monopoly? Explain.
Suppose that the cross price elasticity of demand between goods A and B equals 1.5. Which of the following is TRUE?
A) A and B are complements because the cross price elasticity is greater than one. B) A and B are complements because the cross price elasticity is positive. C) A and B are substitutes because the cross price elasticity is greater than one. D) A and B are substitutes because the cross price elasticity is positive.