A highly profitable cartel arrangement among sellers contains the seeds of its own disintegration because
A) a monopoly arrangement is more unstable than an oligopoly arrangement.
B) a price maintained above each cartel member's marginal cost is an incentive to offer secret price reductions to attract additional business.
C) monopoly agreements will, in the long run, reduce net revenue to zero.
D) net revenue for the cartel as a whole could be increased by producing at the level where marginal revenue equals marginal cost for each cartel member.
E) the cartel members will have a strong incentive to reduce quality.
B
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To combat the undersupply of public goods, a solution is:
A. to change social norms around consumption of the good. B. for the government to step in and provide it directly. C. put a quota on the amount that people can consume. D. to place a quota on the consumption of the good.
When price is $6
A. there is a surplus.
B. there is a shortage.
C. there is both a surplus and a shortage.
D. there is neither a surplus nor a shortage.
Suppose that income taxes are reduced by $400 billion and households increase consumption by 80% of the resulting change in disposable income. Suppose also that the multiplier is 2. What is the marginal propensity to consume?
A) 0.2 B) 0.4 C) 0.8 D) 1.6
A characteristic of a public good is that a public good is provided
A) to some businesses, but not to others. B) only in some states. C) to low income residents in some states. D) to many individuals at no additional cost.