Suppose Acme and Mega produce and sell identical products and face zero marginal and average cost. Below is the market demand curve for their product.
Suppose Acme and Mega decide to collude and work together as a monopolist with each firm producing half the quantity demanded by the market at the monopoly price. If Mega cheats on the agreement by reducing its price to $1 and Acme matches the price cut, then if consumers are evenly split between the two firms, Acme's economic profit will be ________.
A. $75
B. $150
C. $200
D. $100
Answer: A
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The price of a barrel of oil doubled between 2007 and the middle of 2008. To make matters worse, a financial crisis hit the U.S. economy starting in August of 2007
Which of the following is an appropriate description of the mechanism that would have ensued? A) The increase in the price of oil would have immediately shifted the AS curve to the right. B) The financial crisis would have led to a sharp contraction in spending shifting the AD curve to the right. C) Shifts in both the AD and the AS curve would have ensued in the short-run but as long as neither shock had an impact on potential output, ultimately unemployment will have been unaffected in the long run. D) All of the above. E) None of the above.
Monopolistic competition is characterized by many buyers and sellers, product differentiation, and barriers to entry
a. True b. False Indicate whether the statement is true or false
If Gordon’s average tax rate is 10 percent when he earns $100 and his average tax rate is 10.25 percent when he earns $101, then
A. his marginal tax rate is 0.25 percent. B. his marginal tax rate is 35.25 percent. C. his marginal tax rate is 25.25 percent. D. his marginal tax rate is 25 percent.
If a country imposes a tariff on imported shoes, we expect the domestic price of shoes to _______ and the quantity of shoes consumed in the domestic market to _______ .
A) fall; fall B) fall; rise C) rise; fall D) rise; rise