There are only two firms in an industry with demand curves q1 = 30 - P and q2 = 30 - P. Both have no fixed costs and each has a marginal cost of 10 per unit produced. If they behave as profit-maximizing price takers, each produces 20 units and sells them at a price of 10 so that each firm makes zero economic profits. If they formed a cartel and split the production of the output evenly, the

Suppose country X currently produces widgets. Then it establishes a preferential trading agreement with country Y. Following the formation of the PTA, country X no longer produces widgets and imports widgets from country Y. What has occurred?

a. There is trade diversion and a welfare gain for both country X and country Y. b. There is trade diversion, a welfare gain for country Y, and a welfare loss for country X. c. There is trade creation and a welfare gain for both country X and country Y. d. There is trade creation, a welfare gain for country Y, and a welfare loss for country X.

Which of the following affects the interest rate on a loan?

a. all of the following b. the duration of the loan c. the tax treatment of the loan d. the administrative cost of the loan e. the risk of default on the loan