Of the various models of noncooperative oligopoly behavior discussed in the text, which one has the greatest shortcoming when it comes to explaining observed behavior in an oligopoly market What will be an ideal response? ANSWER The kinked demand curve model is built around an assumed market price that currently exists for the market’s […]
In the market for a normal good, what is the ultimate market reaction of suppliers to an increase in the incomes of consumers? A) Suppliers do not react, because a change in income shifts the demand curve, not the supply curve. B) The supply curve shifts to the right. C) The supply curve shifts to […]
A firm acting as a price leader would never reduce market price because this would clearly make all of the firms in the market worse off and defeat the purpose of having a firm act as the price leader. Indicate whether the statement is true or false ANSWER FALSE
Assume that as a firm expands its scale of operation, the minimum point of its short-run average total cost curve is unchanged. In this case, we would say that the firm is experiencing diseconomies of scale. Indicate whether the statement is true or false ANSWER FALSE
Assume a monopolist regularly posts price increases three months in advance of when they will take effect. After a small number of new firms enter the market, the original firm continues the practice of announcing price increases in advance. Following the court’s logic in the Ethyl case, the firms in this market would not be […]
All else constant, an increase in the number of buyers in the market for cell phone service would cause: A) equilibrium price and quantity to increase. B) equilibrium price and quantity to decrease. C) equilibrium price to increase and equilibrium quantity to decrease. D) equilibrium price to decrease and equilibrium quantity to increase. ANSWER […]
________ markets transfer funds from people who have an excess of available funds to people who have a shortage. A) Commodity B) Fund-available C) Financial D) Derivative exchange ANSWER C
Diseconomies of scale are illustrated graphically by an upward shift of the firm’s long-run average cost curve. Indicate whether the statement is true or false ANSWER FALSE
Increase in business taxes will ________ the expenditure curve: A) decrease. B) increase. C) not change. D) none of the above. ANSWER A
As a currency depreciates: A) exports increase and imports decrease. B) exports decrease and imports increase. C) exports increase and imports increase. D) exports decrease and imports decrease. ANSWER A
