Assume that an oligopolist faces a kinked demand curve. Suppose that the marginal cost curve passes through the gap in the marginal revenue curve. Price and output will be determined
a. drawing a line from the point where MC = P to both the vertical and horizontal axis, the vertical indicating output, the horizontal indicating price
b. drawing a line from the point where MC = P to both the vertical and horizontal axis, the vertical indicating price, the horizontal indicating output
c. at the kink
d. at ATC = MC which, too, passes through the gap
e. to be zero because the MC curve passes through the gap
C
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If the MPC is 0.9, then an increase in taxes of $100 can be expected to __________ consumption by the amount of __________
A) increase; $90 B) decrease; $90 C) increase; $100 D) decrease; $100
Historical evidence for the U.S. economy indicates that changes in investment over the business cycle are the biggest cause of changes in
a) profits. b) real GDP. c) consumer spending. d) auto sales.
Refer to Figure 15-12. If this industry was organized as a perfectly competitive industry, the market output and market price would be
A) output = 83; price = $22. B) output = 62; price = $18. C) output = 62; price = $24. D) output = 104; price = $20.80.
The result of the reunification of eastern and western Germany in 1990
A) was a boom in Germany and higher inflation, with no effect on nearby countries. B) was a recession in Germany and lower inflation, with no effect on nearby countries. C) was a boom in Germany and higher inflation, and, with other EMS countries' commitment to fixed exchange rates, a deep recession in nearby countries. D) was a recession in Germany and lower inflation, and, with other EMS countries' commitment to fixed exchange rates, a deep recession in nearby countries. E) was a recession in Germany and lower inflation, causing a boom in nearby countries.