Phil's filling station gas station operates on a patch on the highway in a patch where there were no gas stations close by. It enjoyed high profits. After a while, Glen's gas another gas station opened up close by. The profits for the first gas station are likely to decrease because
a. it has to lower prices, since its product is now more price elastic
b. It has to lower prices since its product is now more price inelastic
c. due to the increased availability of substitutes
d. both A&C
QUESTION 2Is this outcome efficient?
a. Yes because both of them are maximizing their payoffs
b. No, because both of them can do better than their current equilibrium
c. No, because cheating is goodNo, because cheating is good
d. All of the above
QUESTION 3A gas station opened up on the highway in a patch where there are no gas stations close by. It is more likely to be able to set higher prices because
a. the demand for its product is more inelastic due to an unavailability of substitutes
b. the demand for its product is more elastic due to an unavailability of substitutes
c. the demand for its product is more inelastic due to an availability of substitutes
d. the demand for its product is more elastic due to an availability of substitutes
QUESTION 4What is the Nash equilibrium of this game?
a. Cheat, Cheat
b. Not cheat, Not cheat
c. Sam cheats, Sarah doesn't
d. Sarah cheats, Sam doesn't
QUESTION 5Which of the following is false?
a. Products with more close substitutes have more elastic demand
b. The demand for any individual brand is less elastic than industry aggregate demand
c. Products with many complements have less elastic demand
d. In the long run, demand curves become more elastic
QUESTION 6Which of the following is a violation of the antitrust laws?
a. A firm discussing/fixing price with its competitors
b. Making arrangements to stay out each other's markets
c. Merging with the competitor to eliminate competition
d. All of the above
QUESTION 7Which of the following statement is true?
a. The demand for Cheerios is less elastic than the demand for cereal
b. The demand for gas is more elastic in the short-run than in the long-r
c. The demand for puma shoes is more elastic than the demand for shoes
d. Products with many complements have a more elastic demand
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