In a command economy, decisions about how to allocate resources are made:
a. based upon tradition
b. by a central planning board.
c. by individuals and firms interacting in markets coordinated by a price system.
d. by a lottery system.
b
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The key disadvantage of the kinked-demand model is that it:
A) explains why firms may collude, but it does not explain how they interact. B) does not explain why prices may be rigid in an oligopoly. C) requires the assumptions of perfect competition. D) only holds under price leadership.
When workers boycott a company because it does business with a firm whose employees are on strike, that is a
A) secondary boycott. B) primary boycott. C) strike. D) sympathy strike.
In the short run under perfect competition, an individual firm should increase output as long as
a. marginal revenue exceeds marginal cost b. total revenue exceeds total cost c. price exceeds marginal revenue d. total revenue is rising e. marginal revenue is rising
Suppose country X currently produces widgets. Then it establishes a preferential trading agreement with country Y. Following the formation of the PTA, country X no longer produces widgets and imports widgets from country Y. What has occurred?
a. There is trade diversion and a welfare gain for both country X and country Y. b. There is trade diversion, a welfare gain for country Y, and a welfare loss for country X. c. There is trade creation and a welfare gain for both country X and country Y. d. There is trade creation, a welfare gain for country Y, and a welfare loss for country X.