To deter a potential entrant, an existing firm in a market may threaten to sharply increase production so that the entrant will be left with a small share of the market
The firm can make this threat credible by limiting its own options, and possible actions of this type include: A) signing long-term sales contracts that commit the firm to high levels of output.
B) building a very large factory that could potentially produce enough output to meet most of the market demand.
C) signing long-term purchase contracts for large amounts of production inputs.
D) all of the above
D
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The table above shows the situation in the gasoline market in Tulsa, Oklahoma. If the price of a gallon of gasoline is $3.62, then
A) there is a surplus of gasoline in Tulsa. B) there is a shortage of gasoline in Tulsa. C) the gasoline market in Tulsa is in equilibrium. D) without more information we cannot determine if there is a surplus, a shortage, or an equilibrium in the gasoline market in Tulsa. E) there is neither a surplus nor a shortage, but the market is NOT in equilibrium.
Specialization is another word for
A) pursuing one's comparative advantage. B) the division of labor. C) producing at a comparably lower opportunity cost. D) all of the above. E) none of the above.
Economies of scale and diseconomies of scale explain
A) cost behavior in the short run. B) profit maximization in the long run. C) the U-shape of the long-run average cost curve. D) the U-shape of the short-run average total cost curve. E) the U-shape of the marginal cost curves.
Neoclassical growth theory assumes that technological progress
A) is determined by investment. B) is determined by saving. C) responds to economic incentives. D) is a purely chance event.