What is the difference between explicit collusion and implicit collusion?
What will be an ideal response?
Explicit collusion involves making an agreement about not competing. In implicit collusion, no formal agreement is reached, but firms tacitly avoid competing with each other.
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In the figure above, if the price is $8 a unit, is there a shortage or surplus and what is the amount of any shortage or surplus?
What will be an ideal response?
In a labor-market separating equilibrium with high-skill and low-skill workers and where a costly educational degree is used solely as a signal device, government can increase total social welfare by
A) subsidizing school for low-skill workers. B) subsidizing school for all workers. C) eliminating schooling, i.e., banning wasteful signaling. D) subsidizing school for high-skill workers.