If the game in Scenario 13.17 were to be infinitely repeated, waging a price war might be a rational strategy A) because there would be no short-term losses. B) because the short-term losses might be outweighed by long-term gains from preventing entry. C) if the potential entrant were irrational. D) if the monopolist had excess […]
The marginal cost of a monopolist is constant and is $10. The demand curve and marginal revenue curves are given as follows: demand: Q = 100 – P marginal revenue: MR = 100 – 2Q The deadweight loss from monopoly power is ________. A) $1000.00 B) $1012.50 C) $1025.00 D) $1037.50 E) none of the […]
Workers in the U.S. economy get most of their skill training in school. Indicate whether the statement is true or false ANSWER F
Refer to Scenario 13.17. If the Incumbent Monopoly installed excess capacity in advance of the Potential Entrant’s appearance on the scene, and this excess capacity had a cost of $X, it would reduce by $X the Incumbent Monopoly’s payoffs in the A) top row. B) bottom row. C) left column. D) right column. E) entire […]
The “no shirking constraint” (NSC) curve is A) downward-sloping to reflect the fact that at higher wages, firms will monitor workers more to see whether they are shirking. B) downward-sloping to reflect the fact that shirking tends to be higher in lower-paying industries. C) upward-sloping because at high levels of unemployment, workers will refrain from […]
The low-wage workers who escape poverty generally do so permanently. Indicate whether the statement is true or false ANSWER F
In the game in Scenario 13.17, who moves first? A) Potential Entrant B) Incumbent Monopoly C) It’s a sequential game; firms alternate moving first. D) Both players move simultaneously. E) Who moves first is decided by the equilibrium. ANSWER A
The user cost of an exhaustible resource is A) the same as its price. B) the same as its production cost. C) the opportunity cost of using the resource today rather than saving it for the future. D) the amount of the resource that is extracted today. E) not related to the amount of the […]
What is the “Hotelling rule” for situations in which a producer can determine when a good is sold? A) Price must rise at exactly the rate of interest. B) Marginal cost must rise at exactly the rate of interest. C) Price minus marginal cost must rise at exactly the rate of interest. D) Price plus […]
What is the “Hotelling rule” for a monopolist? A) Price minus marginal cost must rise at exactly the rate of interest. B) Price plus marginal cost must rise at exactly the rate of interest. C) Marginal revenue minus marginal cost must rise at exactly the rate of interest. D) Marginal revenue and marginal cost must […]
