Suppose Cournot duopolist firms operate with each having a cost of 30qi (i = 1,2 ) so that each firm's marginal cost is 30. The inverse market demand curve is P = 120 - Q where Q = q1 + q2
Suppose there were no barriers to entry and firms continued to enter so long as there were positive economic profits. At the Nash-Cournot equilibrium, the price, P, is A) 30.
B) 45.
C) 60.
D) 90.
A
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According to the interest-rate-based monetary policy transmission mechanism, a decrease in the money supply will
A) lead to an increase in investment spending and a decrease in real GDP which is greater than the increase in investment spending. B) lead to a decrease in investment spending and an increase in real GDP that is equal to the decrease in investment spending. C) lead to a decrease in investment spending and a decrease in real GDP which is greater than the decrease in investment spending. D) lead to an increase in investment spending and a decrease in real GDP that is equal to the increase in investment spending.
When the fed wants to end a recession, they will act to ___ interest rates and ____ the money supply
a. increase; increase b. increase; decrease c. decrease; decrease d. decrease; increase