With barriers to the entry of new firms
A) a cartel is guaranteed to earn an economic profit greater than zero.
B) a cartel's members have no incentive to cheat.
C) the cartel will likely earn an economic profit greater than zero.
D) industry supply will expand if the firms form a cartel.
C
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Ernie's Earmuffs produces 200 earmuffs per year at a total cost of $2,000 and $400 of this cost is fixed. If he increases output to 220 earmuffs, his total cost increases to $2100, and his fixed cost remains $400. What is Ernie's marginal cost per earmuff?
A) $105 B) $35 C) $9.55 D) $5
Low wages and poor working conditions in many U.S. trade partners
A) prove that the gains-from-trade arguments of the Ricardian model are false. B) may be a fact of life, but economists don't care. C) are facts emphasized by U.S. labor in its contract negotiations. D) prove that the gains-from-trade arguments of the Ricardian model are true. E) prove that international trade is exploitative.