The above figure shows the payoff matrix facing an incumbent firm. Assuming a fixed cost of entry, will the incumbent deter entry? Why?
What will be an ideal response?
It will deter entry. The profit from deterring entry exceeds the profit from accommodating entry.
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In economics, the meaning of demand refers to
A) how badly someone wants a good. B) the quantities of a good that people will buy at various prices. C) the quantities of a good that people will sell at various prices. D) the total satisfaction that consuming a good provides people at different prices.
Under the assumption of rational expectations, government fiscal and monetary policy changes are effective in the short run
A) all of the time. B) only when the short-run aggregate supply curve is the same as the long-run aggregate supply curve. C) only when the policy changes leave the position of the aggregate demand curve unaffected. D) only when the policy changes are unanticipated.
Macroeconomics is the branch of economics that focuses on:
a. broad issues such as growth, unemployment, inflation, and trade balance. b. the actions of particular agents within the economy, like households, workers, and business firms. c. the means of production (resources and businesses) that are owned and operated by private individuals or groups of private individuals. d. workers or firms, and whether they are well suited within the overall production process.
What happens to a monopolistically competitive firm that begins to charge an excessive price for its product?
a. The firm will go out of business. b. Consumers will substitute a rival's product. c. Consumers will boycott the product. d. The government will regulate the price.