In order to survive, cartels must be able to enforce contracts. However, when a cartel is trading in an illegal commodity:
a. it can use the judicial system to enforce contracts.
b. it relies on altruism of members to enforce contracts.
c. it is inherently stable because the market is underground.
d. violence becomes a means of contract enforcement.
e. authorities are effective in preventing the trade.
d
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Everything else remaining unchanged, if the demand curve for reserves shifts to the left and borrowed reserves is zero:
A) there will be a decrease in both the federal funds rate and the quantity of reserves. B) there will be a decrease in the federal funds rate but no change in the quantity of reserves. C) there will be an increase in the federal funds rate but no change in the quantity of reserves. D) there will be an increase in both the federal funds rate and the quantity of reserves.
Using the figure as a guide, which of the following is FALSE with respect to profit maximization and the monopolist?
A) A monopolist (like any other firm) will select an output rate at which marginal revenue is equal to marginal cost, at the intersection of the marginal revenue curve and the marginal cost curve. B) The monopolist will produce quantity Qm and charge a price of Pm. C) When compared to a competitive situation, consumers pay a higher price to the monopolist, and consequently are forced to purchase more of a product as price varies directly with quantity demanded. D) Profits are the positive difference between total revenues and total costs.