Suppose that three oligopolistic firms are currently charging $12 for their product. The three firms are about the same size
Firm A decides to raise its price to $18, and announces to the press that it is doing so because higher prices are needed to restore economic vitality to the industry. Firms B and C go along with Firm A and raise their prices as well. This is an example of A) price leadership.
B) collusion.
C) the dominant firm model.
D) the Stackelberg model.
E) none of the above
A
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Explain the four sources of market failure
What will be an ideal response?
External costs are those costs:
A. that are both social costs and private costs. B. that fall directly on an economic decision maker. C. that fall indirectly on an economic decision maker. D. that are imposed without compensation on someone other than the person who caused them.
Based on the graphic for perfect competition versus monopoly, which is the greatest area?
a. consumer surplus in a monopoly
b. consumer surplus in perfect competition
c. producer surplus in a monopoly
d. producer surplus in perfect competition
U.S. firms collectively devote the largest portion of their total R&D spending to:
A. applied research (pursuing invention). B. basic scientific research. C. innovation and diffusion. D. financing startup firms.