Domestic demand is given by P = 100 - 20 and domestic supply is given by P = 10+ 30. If the world price is 40, then O a. The country exports 20 units Ob Domestic consumers buy 10 units Oc. Domestic producers sell 30 units Od The country imports 20 units. Cartels are often doomed to fail because... O a Cartels are illegal in most countries so firms are likely to turn on each other to avoid prosecution and fines. O b. Cartels work best when there are only two firms involved, not multiple firms, just as personal relationships work best when there are only two people involved, not more OC. The natural market structure is competition and cartels are inherently anti-competitive O d. The cartel price is greater than the marginal cost of any individual member, creating an incentive for each member to break the cartel agreement, A formula that describes the optimal behaviour of one player in terms of the behaviour of the other players is called O a. A separating equilibrium. Ob. A reaction function Oc. A pooling equilibrium Od The Cho-Kreps intuitive criterion A perfectly competitive firm faces a market price of $5. At its current production level its MC = 5, AC = $7 and AVC = $6 The firm should... O a. Maintain production Ob Shut down OC. Increase production. Od Decrease production In economics, decisions are made by... O a. Throwing darts at the board and hoping for something good. O b. Thinking about the political ramifications of an economic action Oc. Considering how they affect the average person. O d. Comparing the marginal benefit of an action against the marginal cost. Monopolistically competitive firms are similar to monopolists in that they... O a Have some level of pricing power O b. Must break even in the long run. OC. Have the ability to price discriminate O d. Dominate their market. In the absence of trade, the consumption possibilities frontier... O a. is a larger set than the production possibilities frontier. Ob is a smaller set than the production possibilities frontier O c. Is not comparable to the production possibilities frontier because there is no trade Od is the same size as the production possibilities frontier Perfectly competitive markets are characterised by firms that O a. Face significant barriers to entry Ob. Lack full information. O c. Produce differentiated products. O d. Are price takers. If free trade generates a net benefit for an economy, why are countries so hesitant to promote it? O a. Gains accrue to a few powerful firms at the expense of the overall economy O b. Individual sectors lose out and are very vocal about it Oc Governments do not understand the gains from trade Od Countries can only gain from exporting and not from importing, so no trade is better than having to accept imports Compared to economists, accountants tend to profits because they tend to costs. O a. Understate, understate. Ob. Overstate; understate, Oc Overstate, overstate O d. Understate; overstate
