Refer to Scenario 25-1. M1 in this simple economy equals
A) $1,000. B) $2,000. C) $3,000. D) $8,000.
C
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When members of an oligopolistic industry agree to collude, raising their product price substantially above average cost, the passage of time (months and years)
a. is usually needed for the members to solidify their cooperation. b. usually results in finer control of prices and markets by the group and larger profit margins. c. is likely to erode the agreement, as ways to cheat are developed by some participants and new entry is encouraged by the high price. d. seldom has any impact on the agreement, as long as the participants maintain high profit levels as a result of the agreement.
If the inflation rate is decreasing while unemployment is increasing: a. the short-run Phillips curve must have shifted right
b. the short-run Phillips curve must have shifted left. c. it must have involved a movement along the short-run Phillips curve d. it would be inconsistent with any possible Phillips curve scenario.
One barrier to entry that may maintain an oligopoly is
a. government policy designed to limit foreign competition b. a low minimum efficient scale c. bounded markup pricing d. efficiency wages that make it impossible for new entrants to compete profitably e. executive payoffs
Why do economists use the concept of elasticity in addition to measurement of the slope of the demand curve?
a. Mathematical equations are favored over graphical analysis. b. Elasticities are independent of the units of measure. c. The concept of elasticity can be used in other areas of economics, whereas the slope of the demand curve is only useful in demand analysis. d. These terms are interchangeable, but elasticity has the more professional sound.