Oligopolists compete on price but not quality.
Answer the following statement true (T) or false (F)
False
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When an economy faces diminishing returns
A) the slope of the per-worker production function becomes steeper as capital per hour worked increases. B) the per-worker production function shifts to the left. C) the slope of the per-worker production function becomes flatter as capital per hour worked increases. D) the per-worker production function shifts to the right.
Assuming a horizontal long-run market supply curve, which of the following statements is (are) TRUE about competitive firms in the long run?
A) p = MC B) p = AC C) profit = 0 D) All of the above.
Suppose the U.S. Drug Enforcement Agency steps up its efforts to control the illegal importation of cocaine into the United States. What is the likely effect on the market for illegal drugs in the United States?
a. The price of cocaine and the quantity imported will both increase. b. The price of cocaine is likely increase and the quantity entering the country decrease. c. The price of marijuana, a cocaine substitute grown domestically, will fall. d. The policy will have the least impact on those individuals whose demand for drugs is elastic. e. Demand for drugs is highly inelastic and these policies have little or no effect on consumption.
An increase in marginal cost that remains within the gap of the marginal revenue curve of a kinked demand oligopolist will:
a. keep price and output the same. b. raise price and decrease output. c. lower price and increase output. d. raise price and raise output. e. lower price and lower output.