Price wars can be the result of
A) a cooperative equilibrium.
B) a firm playing a tit-for-tat strategy in which last period the competitors complied with a collusive agreement.
C) new firms entering the industry and immediately agreeing to abide by a collusive agreement.
D) new firms entering an industry and all firms then finding themselves in a prisoners' dilemma.
D
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A firm sells 1000 units per week. It charges $70 per unit, the average variable costs are $25, and the average costs are $65 . In the long run, the firm should
a. Shut down since price is greater than average cost b. Continue operating price is higher than average cost, its making a profit c. Continue operating as the firm is covering all the variable costs and some of the fixed costs d. Shut-down because it is cost effective to pay off the remaining fixed costs
Increasing the amount of annual per pupil expenditures has helped in increasing student performance. What could make that improvement better?
What will be an ideal response?