For a time, either R. J. Reynolds or Phillip Morris raised prices of cigarettes twice a year by about 50 cents per carton. The other firms in the industry raised their prices by the same amount. Economists call this: a price war.
a. predatory pricing

Refer to the figure above. What is the producer surplus when the price is $70?

A) $800 B) $1,600 C) $2,000 D) $2,800

The nation of Aquilonia has decided to end its policy of not trading with the rest of the world. When it ends its trade restrictions, it discovers that it is importing incense, exporting steel, and neither importing nor exporting rugs. We can conclude that Aquilonia's new free-trade policy has

a. increased consumer surplus and producer surplus in the incense market. b. increased consumer surplus in the steel market and left producer surplus in the rug market unchanged. c. decreased consumer surplus in both the steel and rug markets. d. decreased consumer surplus in the steel market and increased total surplus in the incense market.