Why does each of the following facilitate the creation and stability of a cartel?
a. High barriers to entry
b. An identical product
c. Similar costs
a. A successful cartel implies positive profits. Positive profits attract entry, if it is possible, and increasing the number of firms in the industry erodes the cartel's control and pricing power (or makes it more difficult to negotiate with the larger number of firms in the industry).
b. If products are not identical, then consumers may have brand preferences, and thus it is possible for firms to cheat on the cartel by promoting nonprice differences.
c. If costs are similar, profits are similar, and the incentives of each firm will be similar, all other things equal. This makes it easier to agree on price and more "fair" in the sense that firms will receive similar profits.
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The above figure shows a restaurant engaged in monopolistic competition with other restaurants. The equilibrium quantity at this restaurant is ________ meals per day
A) less than 150 B) between 151 and 250 C) between 251 and 350 D) between 451 and 450 E) more than 451
Positive economics
a. postulates relationships among economic variables that are potentially refutable by real-world events. b. is strictly quantitative and is, therefore, of little value to policy makers. c. will usually indicate which economic policy is best. d. is the same as normative economics.
Which of the following is the best definition of the minimum-wage rate?
a. a wage set through collective bargaining b. the wage that equalizes the quantity demanded and quantity supplied of labor c. a higher wage set in order to improve productivity d. an hourly wage floor set above the equilibrium wage
The difference between positive statements and normative statements is that
A) a positive statement involves a value judgment and a normative statement is a statement of fact. B) a positive statement is a statement of fact and a normative statement involves value judgments. C) value judgments are made in normative statements but assumed in positive statements. D) normative statements are provable while positive statements are not.