Consider two firms competing to sell a homogeneous product by setting price. The inverse demand curve is given by P = 6 ? Q. If each firm's cost function is Ci(Qi) = 6 + 2Qi, then each firm will symmetrically produce ________ units of output and earn ________.
A. 2 units; losses of $6
B. 4 units; losses of $2
C. 4 units; profits of $6
D. 2 units; profits of $2
Answer: A
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If we compare the wage rate and the level of employment achieved in a competitive labour market with those in a monopsonistic labour market, the latter will generate
A) a lower level of employment and a lower wage. B) the same outcomes as in a competitive labour market. C) a higher level of employment and a higher wage rate. D) a lower level of employment and a higher wage rate. E) a higher level of employment and a lower wage.
The supply and demand model assumes
A) no buyer or seller can unilaterally influence the price of the product. B) each unit sold is sold at the same price. C) suppliers and demanders know the price of the product. D) All of the above.