Managers in oligopoly firms must
A) eliminate any barriers to entry if they hope to make short-run profits.
B) advertise heavily in order to differentiate their product.
C) anticipate the reaction of rival firms.
D) establish many varieties of their products to cover the spectrum of consumer tastes.
Answer: C
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Suppose that production of steel in the United States involves negative externalities. Now suppose that U.S. tariffs on steel imports are eliminated and U.S. imports of steel increase. What effect does the elimination of these tariffs have on total social costs associated with steel production in the United States?
a. Total social costs will increase. b. They will not change. c. They will decrease. d. They will increase butc. They will decrease. may be smaller than the private gains from increased steel imports.
What are the gains from specialization and trade?
What will be an ideal response?