Over a particular price range, if the quantity effect of a price decrease is smaller than the price effect, it implies that:
A) demand is elastic in the price range.
B) demand is inelastic in the price range.
C) the demand curve is horizontal in the price range.
D) the demand curve is upward sloping in the price range.
B
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Consider a market with inverse demand p = 100 – 2Q. Firms have no fixed cost and constant marginal cost c
a. Derive the firms' outputs and profits when this market is served by Cournot duopolists. b. How do outputs and profits vary with c? Specifically, use calculus to find the derivative of the output of each firm and profit of each firm with respect to c. c. Suppose the firm's also have a fixed cost of F in addition to the marginal cost c. How does F alter the best response functions and NE? Explain in words. (For technical reasons, assume that both firms still produce a positive level of output in equilibrium)
A major difficulty with the infant industry argument for protection is that
A) government revenue will fall with a tariff. B) it requires the nation to fall into the large country case for tariff protection. C) effective rates of protection are usually greater than nominal rates. D) the measurement of production externalities is difficult and uncertain.