When firms have market power, it means that they:
A. are a price taker.
B. can noticeably affect the market price.
C. do not affect the market quantity offered for sale.
D. can earn as much profit as they want.
B. can noticeably affect the market price.
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What is the Consumer Price Index (CPI)?
What will be an ideal response?
The ________ view says that fiscal stimulus has a multiplier effect that makes it a ________ tool to fight a deep recession
A) Keynesian; weak B) "free lunch"; powerful C) Keynesian; powerful D) mainstream; powerful E) None of the above answers is correct.
A situation in which firms choose their best strategy given the strategies chosen by the other firms in the market is called
a. a competitive equilibrium. b. an open-market solution. c. a socially-optimal solution. d. a Nash equilibrium.
Figure 4-15
Recycling of newspapers has been undermined by its success. The supply of old papers, gathered diligently by those concerned with the environment, has increased dramatically, as has the number of firms that convert the material into recycled newsprint. The quantity demanded has remained relatively stable despite falling prices because newspapers consider recycled newsprint an inferior substitute for regular newsprint. Consequently, the price of recycled newsprint has fallen below the cost of production; recycling firms are going out of business; mountains of old newspapers are left behind. Which graph in Figure 4-15 best illustrates this situation?
a.
1
b.
2
c.
3
d.
4