A decrease in demand could be caused by
a. an increase in price
b. a decrease in the price of a complement.
c. a technological advance.
d. a decrease in the price of a substitute.
d
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In the Stackelberg model, suppose the first-mover has MR = 15 - Q1, the second firm has reaction function Q2 = 15 - Q1/2, and production occurs at zero marginal cost
Why doesn't the first-mover announce that its production is Q1 = 30 in order to exclude the second firm from the market (i.e., Q2 = 0 in this case)? A) In this case, MR is negative and is less than MC, so the first-mover would be producing less than the optimal quantity. B) In this case, MR is negative and is less than MC, so the first-mover would be producing too much output. C) This is a possible outcome from the Stackelberg duopoly under these conditions. D) We do not have enough information to determine if this is an optimal outcome for this case.
If the pricing of one firm is partially influenced by what it thinks another firm will do, the two firms are
A) interdependent. B) bundled. C) tied. D) independent.
Which economist made the following statement: "Every major contraction in the U.S. economy has either been created or greatly exacerbated by monetary instability. Every major inflation has been caused by monetary expansion."
a. Milton Friedman b. John Maynard Keynes c. Adam Smith d. Paul Samuelson
In the short run, total output in an industry
A. is absolutely fixed. B. may be altered by varying the size of plant and equipment that now exist in the industry. C. can vary as the result of new firms entering or leaving the industry. D. can vary as the result of using a fixed amount of plant and equipment more or less intensively.