Microeconomics

In a competitive market, if buyers did not know all the prices charged

In a competitive market, if buyers did not know all the prices charged by the many firms, A) all firms still face horizontal demand curves. B) firms sell a differentiated product. C) demand curves can be downward sloping for some or all firms. D) the number of firms will most likely decrease.   ANSWER C […]

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Date: September 9th, 2020

If a pharmaceutical firm is researching ways to improve its heartburn

If a pharmaceutical firm is researching ways to improve its heartburn medicine and discovers a technique that will improve its allergy medicine, one could conclude that economies of scope exist in that industry. Indicate whether the statement is true or false   ANSWER True . Economies of scope imply that the cost of producing two […]

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Date: September 9th, 2020

Explain why in the case of economies of scope the production possibili

Explain why in the case of economies of scope the production possibility frontier is bowed outward. What will be an ideal response?   ANSWER With economies of scope a firm uses less resources if it produces 2 goods jointly instead of producing the 2 goods in two firms separately. This means that the firm can […]

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Date: September 9th, 2020