What are the possible benefits of collusion to a firm?
What will be an ideal response?
Collusion occurs when firms conspire to set the quantity they produce or the prices they charge, rather than competing on these dimensions. Colluding firms act like a monopoly and then split the monopoly profit. Therefore, a firm entering into a collusive agreement can earn higher profits.
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According to the Black-Scholes formula:
a. the value of an in-the-money option will equal the difference between the stock's current price and the strike price. b. the payoff from an average option is either a multiple or a power of the difference between the strike price and the price they are exercised at. c. the holder of a basket option has the right to buy or sell the underlying at the highest price it has attained over the life of the option. d. the price of a call or put option varies with the price of the underlying asset.
If debt-financed less productive government spending crowds out more productive private investment, future generations will bear
A. All of the burden of the debt due to higher taxes. B. A portion of the burden of the debt relative to the population size. C. Some of the burden of the debt due to lower productive capacity. D. Zero burden as a result of the debt.
Comparative advantage is the ability, compared with another producer
A) to produce more of a product with the same resources. B) to use fewer inputs to produce the same amount of a product. C) to produce a higher-quality product with fewer resources. D) to produce an additional unit of a product at lower opportunity cost.
Freely functioning markets in the real world always result in efficient allocations of resources.
Answer the following statement true (T) or false (F)