Theoretically, profit maximization occurs at P* and q* in the short run. However, empirical work suggests that oligopolists often actually charge P1. What would be the motivation for this action?
a. to increase P 1 above the profit maximization price over the short run
b. to reduce the entry initiative for new firms attracted by long-run economic profit
c. to increase the profit maximization price over the short run
d. to reduce the entry initiative for new firms attracted by zero long-run economic profit
b. to reduce the entry initiative for new firms attracted by long-run economic profit
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A mezzanine fund
A) will never buy equity in a company. B) may buy only equity in a company. C) may buy a combination of equity and convertible debt in a company. D) may buy a combination of equity and straight debt in a company.
As more producers with differing marginal rates of transformation are added, the joint production possibility curve becomes
A) steeper. B) flatter. C) more convex to the origin. D) smoother.