Refer to the graph below for a monopolist in short-run equilibrium. This monopolist:
A. Has a loss per unit equal to DE
B. Has total fixed costs equal to area BEFC
C. Earns positive economic profit equal to the area of ABED
D. Will cease production since its economic profits are negative
A. Has a loss per unit equal to DE
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Bert and Ernie are noncolluding oligopolists. If both choose a high price strategy, each makes $40 in profits; if both choose a low price strategy, each makes $30 in profits. If Bert chooses a high price strategy and Ernie chooses a low price strategy, Bert makes $20 in profits and Ernie makes $60 in profits, while if Bert chooses a low price strategy and Ernie chooses a high price strategy, Bert
makes $60 in profits and Ernie makes $20 in profits. Which combination of pricing strategies would you expect Bert and Ernie to adopt if they act independently? a. Both choose a high price strategy. b. Both choose a low price strategy. c. Bert chooses a high price strategy and Ernie chooses a low price strategy. d. Bert chooses a low price strategy and Ernie chooses a high price strategy.
Low-skill workers earn a lower wage than more experienced, higher skilled workers because the
a. low-skill workers lack the intelligence necessary to do any other form of work. b. low-skill workers were never given the opportunity to invest in human capital. c. supply of low-skill workers is large relative to the demand for workers in this skill category. d. low-skill workers are too lazy to search for other employment opportunities.