The success of a cartel rests upon
A) inducing all members to limit their combined output and charge the same price.
B) inducing all members to differentiate their products and charge different prices.
C) making exit from the cartel as nearly costless as possible.
D) discouraging some firms in the market from joining.
Answer: A
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Suppose a chemical plant regularly dumps chemicals into a river that must be cleaned up before farmers located downstream can use the water on their crops
Dumping the chemicals into the river saves the chemical plant $750,000 in yearly disposal costs and cleaning the water costs farmers $825,000 each year. Explain what the benevolent social planner would like to see happen in this case.
The tax code in the United States allows for the deductibility of mortgage interest, but not for interest on credit cards. Why is this difference allowed to exist?
What will be an ideal response?
An individual who is a risk lover
a. values a lottery at more than its expected value b. values a lottery at exactly its expected value c. values a lottery at less than its expected value d. tends to play lots of lotteries
All of the following are sources of the impact lag except
A) it takes some time for the deposit multiplier process to work itself out. B) firms need some time to respond to the monetary policy with respect to their investment plans. C) it takes time for the Fed to formulate a policy that best addresses a problem in the economy. D) a monetary change is likely to affect the exchange rate, but that translates into a change in net exports only after some delay.