Cartels are difficult to maintain because:
a. there are generally few barriers to entry in oligopoly markets.
b. firms have a strong private incentive to cheat on agreements.
c. it is difficult to enforce a cartel agreement
d. both (b) and (c).
d
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If a regulatory agency sets the price equal to marginal cost for a natural monopoly, the
A) government might have to provide a subsidy to the firm to keep it in business. B) price is the same as the unregulated monopoly price. C) firm makes an economic profit, though not the maximum economic profit. D) firm makes the maximum economic profit. E) firm makes zero economic profit.
If the factor supply curve facing a monopolist is the market supply curve, and if the market supply curve is an upward sloping straight line, the marginal expenditure curve
A) lies below the market supply curve. B) lies above the market supply curve. C) is the market supply curve. D) crosses the market supply curve at the market wage rate. E) either A or B is possible.
The term fractional reserves refers to
A. The fact that reserves are split among many banks. B. The ratio of required reserves to total loans. C. The ratio of excess reserves to total loans. D. Reserves being a small fraction of total transactions account balances.
If a large percentage change in price leads to a smaller percentage change in quantity demanded, the result is a:
A. very elastic demand. B. high magnitude of response. C. less elastic demand. D. low magnitude of response.