Developing countries have often attempted to establish cartels so as to counter the actual or perceived inexorable downward push on the prices of their exported commodities. OPEC is the best well known of these
How are such cartels expected to help the developing countries? At times importing countries profess support for such schemes. Can you think of any logical basis for such support? How are cartels like monopolies, and how are they different from monopolies. Why is there a presupposition among economists that such schemes are not likely to succeed in the long run?
Such cartels are expected to shift the exporters' terms of trade in their favor. Also they are expected to produce the maximum profit, which the market will bear. Importing countries may benefit from the price stability generated by the cartel. Cartels are like monopolies in that their total output is the same as that which would be generated by a single monopoly. They differ from monopolies in that the monopoly profits need to be divided among the producing countries, which have different cost structures.
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In long-run equilibrium, a firm in monopolistic competition makes
A) an economic profit, but the economic profit is less than it would be if the firm was a monopoly. B) an economic profit that is higher than what it would be if the firm was a monopoly. C) zero economic profit. D) an economic profit that is the same amount as it would be if the firm was a monopoly. E) an economic profit, an economic loss, or zero economic profit.
What is the value of the Lerner index under perfect competition?
A) 1 B) 0 C) infinity D) two times the price
In the arena of trade policy, the battle often seems to be between ________ laws that increase protectionism and ________ agreements that try to reduce protectionism.
a. national; national b. international; international c. national; international d. international; national
When input prices adjust slowly, the multiplier is smaller.
Answer the following statement true (T) or false (F)