In a duopoly, one firm's low-price guarantee:
A. eliminates the other firm's incentive to undercut the first firm's price.
B. encourages the other firm to cut its prices.
C. guarantees that consumers will pay the lowest price possible.
D. is ineffective because firms always have an incentive to break their agreements.
Answer: A
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Markets exist to facilitate exchange between people
Indicate whether the statement is true or false
Recall from Chapter 5: interest rates in the free market (without artificial lowering by the Fed) are largely determined by
A) Congress. B) arbitrary bank lending practices. C) household saving and consumption preferences. D) tax revenues and lobbying demands.
For a firm in a perfectly competitive industry, price equals marginal revenue.
Answer the following statement true (T) or false (F)
Refer to Figure 34.3. The disincentive to work caused by this welfare program
A. Exists at all income levels. B. Ends as soon as any income is earned. C. Ends at $10,000. D. Ends at $5,000 where benefits equal wages.