The U.S. economy remains subject to frequent boom and bust cycles. Throughout U.S. history, policymakers after the Great Depression often
(a) raise or lower taxes and spending to adjust aggregate demand and thereby smooth the
business cycle.
(b) take a hands-off approach to the business cycle.
(c) consult with world organizations on how to address cyclic fluctuations.
(d) close economies to international trade.
(a)
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Your friend owns a snow cone stand that he works by himself. He produces about 25 snow cones per hour. He wants to be able to produce twice as many snow cones per hour so he buys a second machine
He notices that he can only produce 10 more snow cones an hour. He jokes that he could have doubled his output with the second machine if he only had four hands. Using your knowledge of the production process, explain to your friend what you think has happened when he added more capital to his production process.
Is there a first-mover advantage in the Bertrand duopoly model with homogenous products?
A) Yes, first-movers always hold the advantage over other firms. B) Yes, first-movers may have an advantage, but it depends on the model assumptions. C) No, first-movers cannot choose a profit maximizing quantity because the second-mover can always produce a bit less and earn higher profits. D) No, the second-mover would be able to set a slightly lower price and capture the full market share.