An effective agreement to divide up the market among firms selling products that are close substitutes
A) allows each firm to earn positive net revenue even though its marginal cost is greater than its marginal revenue.
B) allows each firm to earn positive net revenue by preventing cooperation from reducing each firm's marginal revenue below its marginal cost.
C) tends to keep each firm's price and marginal revenue above its marginal cost.
D) tends to result in both higher prices and larger output.
C
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Which of the following will lead to a higher interest rate on a loan?
A) lower inflation B) lower opportunity cost C) increased perceived risk of default D) reduced likelihood of borrower not paying the loan
The output gap is
A) the difference between target output and realized output. B) the difference between initial output and final output. C) the difference between market-clearing output and actual output. D) the difference between forecasted output and past output.