Oligopoly is more difficult to analyze than other market models because:
A. the number of firms is so large that market behavior cannot be accurately predicted.
B. the marginal cost and marginal revenue curves of an oligopolist play no part in the
determination of equilibrium price and quantity.
C. of mutual interdependence and the fact that oligopoly outcomes are less certain than in
other market models.
D. unlike the firms of other market models, it cannot be assumed that oligopolists are profit
maximizers.
Answer: C
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The ability of employers to increase their net revenue by paying low wages is limited primarily by
A) federal and state legislation. B) the fact that net revenue is maximized when marginal revenue equals marginal cost. C) the other opportunities available to employees. D) the right of labor unions to strike.
If a bank has excess reserves of $4,000 and demand deposit liabilities of $100,000, and if the reserve requirement is 15 percent, then the bank has actual reserves of
A) $17,000. B) $19,000. C) $24,000. D) $29,000.