In the scenario above, which of the following actions will maximize the industry's economic profit?
A) Both firms comply with the agreement.
B) Both firms cheat on the agreement, producing more than the agreed amount.
C) One of the firms complies with the agreement while the other firm cheats, producing more than the agreed amount.
D) Because the firms are colluding, the profit does not change regardless of whether the firms comply with agreement or cheat on the agreement.
A
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The figure above shows a production possibilities frontier. In the figure, which of the following combinations of the two goods cannot be produced with the current resources and technology?
A) 5 million cell phones and no DVDs B) 1 million cell phones and 14 million DVDs C) 4 million cell phones and 4 million DVDs D) 3 million cell phones and 5 million DVDs E) 2 million cell phones and 13 million DVDs
An increase in business tax rates, combined with a decrease in consumer confidence, would have what effect on aggregate demand? a. AD would increase
b. AD would decrease. c. AD would stay the same. d. AD could either increase or decrease, depending on which change was of a greater magnitude.