In a contestable market with one firm in the market, the existing firm will
A) set its price equal to the monopoly price.
B) set its price lower than the monopoly price.
C) set its price higher than the monopoly price.
D) have a demand curve that is horizontal at the price that will attract new firms to enter the market.
B
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Using the scenario above explain how this could have happened?
What will be an ideal response?
According to traditional Keynesian analysis, fiscal policy operates by
A) informing consumers and business people about its plans for the economy so they will know how to adjust their behavior. B) indirectly affecting aggregate demand through its effect on interest rates. C) directly affecting aggregate demand. D) directly affecting aggregate supply.
over the long haul, rapid increases in the supply of money lead to
What will be an ideal response?
If a firm experiences economies of scale as it expands production, then:
a. it is not subject to diminishing returns. b. its marginal cost curve will be downward sloping in that range. c. its marginal product curve will be downward sloping in that range. d. its long-run average total cost curve will be downward sloping in that range.