Suppose that a regulated industry experiences an increase in the price of inputs used to produce the good. Which of the following statements is TRUE?
A) Under both the capture theory and the share-the-gains, share-the-pain theory profits will decrease.
B) An increase in price will occur quicker in the share-the gains, share-the-pain theory than the capture theory.
C) An increase in price will occur quicker in the capture theory than the share-the-gains, share-the-pain theory.
D) In the capture theory there will be an increase in price but not in the share-the-gains, share-the-pain theory.
C
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A. lower; potential B. higher; higher C. lower; higher D. higher; potential
Does a perfectly competitive producer have any incentive to undercut the current market price? Explain your answer
What will be an ideal response?
Fixed costs are
a. costs that vary with output b. equal marginal costs c. costs that do not vary with output d. equal to total costs
In recent years the discussions of the causes of recessions have focused on monetary policy and higher oil prices as the likely causes. Discuss how we can get insight into the likely cause by focusing on macroeconomic variables.
What will be an ideal response?