An incumbent monopolist producing more output than necessary might be able to keep potential rivals from entering
A) by flooding the market with products below its marginal cost in the short run.
B) if learning by doing reduces marginal cost.
C) if the long-run marginal cost can be lowered below the potential entrant's short-run marginal cost.
D) All of the above.
D
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Indicate whether the statement is true or false
If the Taylor Principle is not followed and nominal interest rates are increased by less than the increase in the inflation rate, then real interest rates will ________ and monetary policy will be too ________
A) rise; tight B) rise; loose C) fall; tight D) fall; loose
If an economist recommends that the government reduce the tax rate in order to increase tax revenues (based on the Laffer curve), she is implicitly assuming that the economy is currently operating at a point
A) inside the Laffer curve. B) outside the Laffer curve. C) on the upward-sloping portion of the Laffer curve. D) on the downward-sloping portion of the Laffer curve. E) where tax revenues are maximized.
Relative to a market with perfect information, in a market with imperfect information:
A. some goods will be sold in small quantities or not at all. B. more than the equilibrium quantity of goods will be sold. C. the equilibrium quantity will be sold, but at a price higher than the equilibrium price. D. the equilibrium quantity will be sold for the equilibrium price.