Suppose the government believes that the equilibrium price established on the market by the forces of supply and demand is too low and, to correct it, sets a minimum price. That is to say, price is allowed to be higher, but it cannot be lower than that minimum. Economists call that minimum price a(n)
a. price ceiling
b. price floor
c. parity price
d. deficiency price
e. equilibrium price
B
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A tit-for-tat strategy in a two-firm balanced oligopoly results in
a. A Nash equilibrium b. one firm setting price and announcing that it would match whatever price its rival firm charges c. both firms competing as if the market were perfectly competitive d. both firms colluding to set and maintain relatively high prices e. one firms punishing its rival for setting price above its own
The value of intermediate goods is excluded from the measurement of GDP in order to:
A. measure GDP in constant prices. B. avoid double counting. C. adjust for inflation. D. index economic activity.
In the case of a linear demand curve, demand becomes more price elastic as price increases
Indicate whether the statement is true or false