In which market structure is there clear interdependence between individual firms with regard to prices and sales?
a. pure competition.
b. monopolistic competition.
c. oligopoly.
d. monopoly.
QUESTION 2We call a group a team if the total output produced by the group can be separated into individual outputs.
Indicate whether the statement is true or false
QUESTION 3Firms serve similar functions to
A) courts.
B) governments.
C) markets.
D) all of these choices.
QUESTION 4Economists believe that oligopolists like American Airlines and the Kellogg Company:
a. make price and output decisions without regard to what their competitors might do.
b. have no perceptible influence on the market price, but choose output where marginal revenue equals the marginal cost of production.
c. carefully watch and anticipate the moves of their competitors.
d. have no control over market but produce output to the point where demand equal marginal cost.
QUESTION 5Explain the difference between adverse selection and moral hazard?
QUESTION 6Stockholders have little incentive to monitor
A) managers.
B) stock markets.
C) stock prices.
D) their portfolios.
QUESTION 7____ make(s) it difficult for an oligopoly to maintain a cooperative outcome with low production, high prices, and monopoly profits.
a. Self-interest
b. Incentives to cheat
c. Government antitrust policy and regulation
d. All of the above
QUESTION 8What is asymmetric information? Describe with examples.
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