Foundations of Economics (8th Edition)
8th Edition
ISBN: 9780134486819
Author: Robin Bade, Michael Parkin
Publisher: PEARSON
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Textbook Question
Chapter 18, Problem 2MCQ
If firms in oligopoly form a cartel, it will likely break down because ____________ .
A. firms cannot agree on how to share the economic profit
B. the price set by the cartel is too low
C. with price exceeding marginal cost, a firm might expand production to increase its profit
D. firms realize that their allocation of resources is inefficient
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The table shows the demand schedule for a particular product.
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Suppose the market for this product is served by two firms who have formed a cartel and are colluding to set the price and quantity in this market. If the marginal cost to produce this product is constant at $40 per unit, then what price will the cartel set in this market?
a. $40 b. $50 c. $60 d. $70 e. $80
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The graph below depicts the market demand curve faced by a hypothetical cartel operating in the US. Use
the graph to highlight the area that represents the profits earned by the cartel.
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If the US government decides to break up the cartel. Which
of the following pieces of legislation could the cartel be
prosecuted under?
The Sherman Antitrust Act
The First Amendment
The Dodd Frank Act
The Glass Stegall Act
With the aid of a diagram explain how a monopolist determines how much output to produce and what price to charge.
b. Explain how the perfectly competitive firm decides whether to operate or shut down in the short run.
c. Explain why firms operating in monopolistically competitive markets probably will not earn an economic profit in the long run.
d. Why does interdependence of firms play a major role in oligopoly but not in perfect competition or monopolistic competition?
Question 2a. A producer borrows money and starts a business. He himself looks after the business. Identify implicit and explicit costs from this information. Explain.
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Chapter 18 Solutions
Foundations of Economics (8th Edition)
Ch. 18 - Prob. 1SPPACh. 18 - Prob. 2SPPACh. 18 - Prob. 3SPPACh. 18 - Prob. 4SPPACh. 18 - Prob. 5SPPACh. 18 - Prob. 6SPPACh. 18 - Prob. 7SPPACh. 18 - Prob. 8SPPACh. 18 - Prob. 1IAPACh. 18 - Prob. 2IAPA
Ch. 18 - Prob. 3IAPACh. 18 - Prob. 4IAPACh. 18 - Use this information to work Problems 5 to 7. DOJ...Ch. 18 - Use this information to work Problems 5 to 7. DOJ...Ch. 18 - Prob. 7IAPACh. 18 - Which of the following statements is incorrect. In...Ch. 18 - If firms in oligopoly form a cartel, it will...Ch. 18 - Prob. 3MCQCh. 18 - Prob. 4MCQCh. 18 - Prob. 5MCQCh. 18 - Prob. 6MCQCh. 18 - Prob. 7MCQ
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