__________is the amount of a product that is offered for sale at all possible prices that could prevail in a market.
Fill in the blank(s) with the appropriate word(s).
Ans: Supply
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Limit pricing refers to
A) the fact that a monopoly firm always sets the highest price possible. B) how the price is determined in a kinked demand curve model of oligopoly. C) a situation in which a firm might lower its price to keep potential competitors from entering its market. D) none of the above.
Assume that the supply curve is horizontal because marginal cost is constant at $10. John, Robert, and Jimmy each value one compact disc at $20 but only Jimmy and John value a second compact disc (Jimmy at $5 and John at $15). If a social planner dictates that two compact discs be produced and distributed to John, Robert, and Jimmy, then even if the compact discs are allocated based on demand, this market will lose out on $___ of value.
a. $5. b. $10. c. $15. d. There will be no lost value as five compact discs is the efficient level.