Econ Final

higher; D2

A monopolist sells its output in two markets, each with different demand curves as shown in this figure. If the marginal cost is identical in both markets, the monopolist should charge a ______ price in the inelastic market, represented by the demand curve ______.

set a price of $10 in Canada and $7.50 in Europe

A monopolist sells its output in two markets: Canada and Europe, as shown in these figures. To maximize profits, the monopolist should:

$40; $40

If the market in this figure is in equilibrium, the hourly wage paid to plumbers is ______ and the marginal product of a plumber is ______.

A cartel can remain powerful even when all the members engage in secret price cuts.

False

A cartel is a group of consumers that tries to act together to increase their bargaining power.

False

A dominant strategy is a strategy that a player should take only if the other player cheats.

False

A firm should always shut down if it is earning negative profits.

False

A firm will attain more monopoly power as demand for its product becomes more elastic.

False

A firm with no competition faces a perfectly inelastic demand curve.

False

A firm's total profit is equal to the marginal cost of production multiplied by the quantity produced.

False

A monopoly maximizes profit by finding the output level where the difference between marginal revenue and marginal costs is as large as possible.

False

A profit-maximizing monopolist chooses the output level where MR = MC and chooses the corresponding price from the marginal revenue curve.

False

According to one of this weeks' podcasts: "The LeBron study found a nearly 75 percent increase in employment for businesses like Wilbert's near the stadium."

False

According to the Coase theorem, the private market will need government intervention in order to reach an efficient outcome when externalities are present.

False

According to this week's video: "Now, in China everything is supersized, and so we're [Uber] doing 100,000 uberPOOL trips per month, that's 3,333 per day."

False

Although price discrimination may increase the profits of drug companies, it reduces the incentive for drug companies to develop new drugs.

False

An example of a transaction cost for a shirt is the price you pay for a shirt.

False

An example of price discrimination is charging more for steak than for a hamburger.

False

An external cost is built into the market price of a good and thus paid by the consumers.

False

Antibiotics tend to be overused, as the producers of antibiotics are required to bear all the costs of antibiotic use.

False

Average total cost is equal to total cost divided by profit.

False

Deadweight loss is present in both competitive and monopoly markets.

False

Decreasing cost industries have supply curves that slope downward forever.

False

Economic profit is equal to total revenue minus explicit costs.

False

Explicit costs incurred by firms include the firm's opportunity costs.

False

Firms have less pricing power if their firm-level product is more unique.

False

For a monopoly, the entire consumer surplus is transferred to the monopolist as profit.

False

If P = $20, AC = $16, and Q = 100, then profit = $3,600.

False

If the marginal product of labor is $10 an hour, the firm should hire the worker so long as the wage (including fringe benefits) exceeds $10 an hour.

False

When externalities are present in a market, social surplus is maximized.

False

$0 to $48

If the two-firm oligopoly facing the market in this diagram is currently producing at the competitive output level and one of the firms reduces output by 4 units, the firm's profits would increase from _________________.

$60

If this figure represents the demand and cost curves for a firm with market power, what price should the firm charge to maximize profits?

MR2.

In this figure, the monopolist's marginal revenue curve is:

How does price discrimination increase social surplus?

It expands the output that a firm would otherwise produce.

b; abc

Refer to the figure. A monopolist who cannot price discriminate earns profit equal to area(s) ________, and a monopolist practicing perfect price discrimination earns profit equal to areas ________.

def.

Refer to the figure. Deadweight loss caused by monopoly pricing is represented by the area:

2

Refer to the figure. How many workers will this firm hire at a wage of $29?

$96

Refer to the figure. If you are one of literally thousands of maple syrup producers and you wanted to increase your maple syrup production from 100 gallons to 110 gallons, what price would you charge?

$0

Refer to the figure. In the long run, what do you expect this firm's economic profit or loss to be?

$4.50; $18

Refer to the figure. Profit for the single-price monopoly in this diagram is ______, and under perfect price discrimination, profit is ______.

b; z

Refer to the figure. Suppose that a German manufacturer can sell its kidney lithotripter in two markets: Country X and Country Y. If this firm is interested in maximizing profits, it should set a price of ________ in Country X and ________ in Country Y.

80.

Refer to the figure. The competitive industry level of output is:

b - d.

Refer to the figure. The monopolist's price markup is:

area A

Refer to the figure. Which of the following answers correctly indicates the profit earned by this monopolist at the profit-maximizing quantity?

W2; N1

Refer to the figure. Which of the following would represent the wage and number of workers of unionized jobs?

P2 and Q2

Refer to the figure. Which price and quantity combination represents the efficient equilibrium?

Panel A

Refer to the set of four panels in the figure. Which panel shows the typical shape of the average cost curve in a competitive market?

A Pigouvian subsidy should be set equal to the amount of the external benefit.

True

A cartel is a group of firms that try to monopolize the market.

True

A competitive firm maximizes profits when price equals marginal cost.

True

A dominant strategy is a strategy that has a higher payoff than any other strategy no matter what the other player does.

True

A firm should exit an industry if price is less than average cost.

True

A firm will continue to produce additional output, as long as marginal revenue is greater than marginal cost.

True

A firm's short-run supply curve is its marginal cost curve.

True

A government can maximize efficiency in monopoly markets by setting prices equal to the monopolist's average cost of production albeit at the cost of reduced long term innovation.

True

A monopolist maximizes profits where marginal revenue equals marginal cost.

True

A monopolistic industry will have lower output and higher prices than a competitive industry.

True

A monopoly is a firm with market power, and market power may arise from economies of scale, patent protection, and innovation.

True

According to last week's video: In 1990, exports from China to the United States: 15 billion dollars. By 2007: over 300 billion dollars

True

According to this week's podcast "North Korea is also known as the 'Hermit Kingdom'"

True

According to this week's podcast: "In 1984, you couldn't succeed in a computer science program without having had a home computer, and this bled into the workforce."

True

Airlines engage in price discrimination.

True

An externality is either an external cost or external benefit that spills over to bystanders.

True

An individual's labor supply curve might be backward bending.

True

Average cost is equal to total cost divided by quantity.

True

College graduates are paid more, on average, partly because the act of finishing college signals that they are more likely to be a good employee.

True

Game theory can be used to study cartels and their behavior.

True

Game theory is used to model decisions in situations where the players interact.

True

GlaxoSmithKline attempts to prevent arbitrage of its drug Combivir by selling different colored pills in special bar-coded packages, to identify and track distributors in different markets.

True

If the marginal product of labor is constant in labor, then a market labor demand curve is:

flat.

Firms are profitable when price is:

greater than average cost.

A firm is willing to hire a worker when the marginal product of labor is:

greater than the wage.

A firm will hire workers as long as the marginal product of labor is:

greater than the wage.

A firm will hire a worker whenever that worker's marginal product of labor is:

greater than the worker's wage.

A cartel is a:

group of suppliers that tries to act as if they were a monopoly.

A government-supported cartel usually means:

higher prices.

Compared to a competitive market, firms operating in a cartel will charge a price that is:

higher than the competitive price.

Airlines try to differentiate their customers by willingness to pay based on:

how long in advance a person books their flight.

Economic profit differs from accounting profits because of its inclusion of:

implicit costs.

In a market economy discrimination by employers will NOT:

increases the firm's profits.

A free market with an external benefit is ______, and one with an external cost is ______.

inefficient; inefficient

A monopolist can raise its price further above marginal cost, the more ______ is the ______ for its product.

inelastic; demand

An external cost:

is a cost paid by people other than the producer or consumer trading in the market.

Discrimination by employees:

is a situation in which one group of workers doesn't want to work with another group of workers.

A market labor supply curve

is always positively sloped.

A Pigouvian tax:

is levied on a good that creates a negative externality and should be set equal to the external cost to eliminate the deadweight loss.

An efficient equilibrium occurs when:

social costs equals social benefits.

An external cost is a cost paid by:

people other than the consumer and the producer trading in the market.

An external benefit is a benefit received by:

people other than the consumers or producers trading in the market.

A museum in Russia has two entrances: one for locals (written in Russian) and one for tourists (written in English). People who enter through the entrance written in Russian will end up paying 81.93 Rubles ($3.00). English-speaking tourists will use the entrance written in English, but they will end up paying 409.67 Rubles ($15.00). This practice is an example of

price discrimination.

Economists call selling the same product at different prices to different customers:

price discrimination.

Firms should exit the market if:

price falls below the average cost.

A binding minimum wage is a(n) ______ for labor.

price floor

(Table: Oil Output) Refer to the table. The situation between Iraq and Iran is similar to a:

prisoner's dilemma.

When the government intervenes in markets with external costs, it does so in order to:

protect the interests of bystanders.

All of the following would be government solutions to externality problems EXCEPT:

public sector charities.

A cartel is a group of suppliers who act together in order to:

reduce supply, increase prices, and increase profits

A union can raise wages by:

reducing the supply of labor.

Firms in a perfectly competitive industry maximize profits by:

setting a price equal to the market price.

A monopolist facing different demand curves in two separate markets maximizes profit by:

setting marginal revenue equal to marginal cost and charging the maximum price that demand will bear in each market.

An efficient equilibrium occurs whenever:

social surplus is maximized.

For price discrimination to work, the young should ________ than/to the old.

sometimes be charged more and sometimes charged less

A free market void of externalities ______ social surplus

sometimes maximizes

In a world of perfect information:

statistical discrimination would not exist.

Game theory is the study of:

strategic decision making.

For a linear demand curve, the marginal revenue curve has:

twice the slope.

Gillette's practice of selling razors at a relatively low cost but marking up the price significantly on its blades when Gillette razors will only work with Gillette blades is an example of:

tying.

Hewlett Packard's pricing scheme is to sell printers at relatively low price and ink cartridges at relatively high price. This practice is known as:

tying.

Discrimination is:

using information about group averages to make conclusions about individuals.

For a monopolist, MR is always less than P because:

when a monopolist lowers the price to sell more units, it must lower the prices of all units sold.

A + B + C.

(Figure: Monopoly 6) If the market in this figure is a competitive market, consumer surplus is given by area(s):

A; C

(Figure: Monopoly 6) If the market in this figure is a monopoly, the consumer surplus is area ______, and the deadweight loss is area ______.

14 units of output.

(Figure: Monopoly 8) If the government set price equal to average cost, the natural monopolist in this figure would produce:

9 units of output.

(Figure: Monopoly 8) The natural monopolist in this figure would produce:

triangle adf.

(Figure: Monopoly Markup) Refer to the figure. Consumer surplus under competition is represented by:

triangle abc.

(Figure: Monopoly Markup) Refer to the figure. Consumer surplus under monopoly is represented by:

triangle cef.

(Figure: Monopoly Markup) Refer to the figure. The deadweight loss attributable to monopoly is:

$420.

(Figure: Monopoly Profits) Refer to the figure. The monopolist earns a profit of:

P = $16.50; Q = 40

(Figure: Monopoly Profits) Refer to the figure. What is the monopolist's optimal price and output level?

b units of output.

(Figure: PPD) Refer to the figure. A firm that perfectly price discriminates will sell:

(Table: Oil Output) Refer to the table. The equilibrium outcome is:

$65, $65.

P2 Q12 To operate a motorcycle you must have a...

(Figure: Competitive Market) Refer to the figure. If all firms in the market form a successful cartel, price and output in the market would be:

P1 and Q2.

(Figure: Competitive Market) Refer to the figure. If the market is competitive, price and output in the market would be:

$160.

(Figure: Costs of Oil Production) Refer to the figure. Assuming that price equals marginal cost, the profit of producing eight barrels of oil is:

$75.

(Figure: Costs) Use the figure. At a price of $20, the firm earns profit of:

decrease from 6 to 3.

(Figure: Demand 1) A cartel facing the market in this diagram would try to cause industry output to:

increase from $4 to $7.

(Figure: Demand 1) A successful cartel facing the market in this diagram would cause the industry price to:

social cost of production: the private cost plus the external cost.

(Figure: Dishwashing Detergent) Refer to the figure. Dishwashing detergent contains phosphates that harm marine life. In this figure, SC represents the:

$6

(Figure: Dishwashing Detergent) Refer to the figure. Dishwashing detergent contains phosphates that harm marine life. In this figure, what is the external cost of using dishwashing detergent?

P2 and Q1.

(Figure: Efficient Market Outcome) Refer to the figure. The efficient price and quantity are, respectively:

C

(Figure: Efficient Market Outcome) Refer to the figure. Which point represents the efficient equilibrium?

profit; supply curve to shift to S2

(Figure: Industry Firms) Refer to the figures. The market is characterized by demand curve D2 and supply curve S1. The firms in the industry are earning ________, which will cause the______________.

deadweight loss of approximately $750.

(Figure: Market for Vaccines) Refer to the figure. The figure represents the market for vaccines with external benefits. The market's outcome generates a(n):

P2.

(Figure: Maximize Monopoly Profits) Refer to the figure. The monopolist will maximize its profit by charging a price equal to:

Q2.

(Figure: Maximize Monopoly Profits) Refer to the figure. The monopolist will maximize its profit by producing at output equal to:

$100

(Figure: Maximum Willingness to Pay) Refer to the figure. What is the maximum price that the consumer is willing to pay for 100 units?

110

(Figure: Maximum Willingness to Pay) Refer to the figure. What is the profit-maximizing quantity for this monopolist?

$45.

(Figure: Monopolist 3) In this figure, the monopolist's maximum profit is:

9 units of output at $11 per unit.

(Figure: Monopolist 3) In this figure, the profit-maximizing monopolist sells:

$9 < PU < $10

(Figure: Monopolist) Refer to the figure. Based on the demand curves for a monopolist's product in two different markets—Market A and Market B—if the monopolist were to charge a uniform price PU between the two markets, in which range would the price fall?

$450

(Figure: Monopolist) Refer to the figure. Based on the demand curves for a monopolist's product in two different markets—Market A and Market B—through the process of price discrimination, how much profit is the monopolist making in Market A?

$520

(Figure: Monopolist) Refer to the figure. Based on the demand curves for a monopolist's product in two different markets—Market A and Market B—through the process of price discrimination, how much profit is the monopolist making in Market B?

$10

(Figure: Monopolist) Refer to the figure. Based on the demand curves for a monopolist's product in two different markets—Market A and Market B—what price should the monopolist charge in Market A?

$9

(Figure: Monopolist) Refer to the figure. Based on the demand curves for a monopolist's product in two different markets—Market A and Market B—what price should the monopolist charge in Market B?

The marginal cost is less than consumers' willingness to pay for these units.

(Figure: PPD) Refer to the figure. Which of the following statements best explains why a firm that perfectly price discriminates would sell additional units beyond a units of output?

A firm will not sell beyond c units of output. The marginal cost is greater than consumers' willingness to pay for these units.

(Figure: PPD) Refer to the figure. Which of the following statements best explains why a firm that perfectly price discriminates would sell additional units beyond c units of output?

not change.

(Figure: Paint Market 2) If the fixed costs were halved, deadweight loss would:

$125,000

(Figure: Paint Market 2) What is the deadweight loss (if any) from the monopoly in this diagram relative to its optimum quantity?

$100,000,000

(Figure: Palm Oil) Refer to the figure. Indonesian palm oil producers deforest tropical rainforests to grow the plants that excrete the oil. With this externality, what is the deadweight loss (if any) of producing palm oil?

$0

(Figure: Perfect Price Discrimination) Refer to the figure. For a firm practicing perfect price discrimination, calculate the dollar amount of consumer surplus in this market.

the demand curve

(Figure: Perfect Price Discrimination) Refer to the figure. Which curve represents the marginal revenue (MR) curve for the monopolist who practices perfect price discrimination?

$8; $0

(Figure: Price-Discriminating Monopolist 2) Consumer surplus with a single-price monopoly is ______, and consumer surplus with a perfect price discrimination is ______.

8; 4

(Figure: Price-Discriminating Monopolist 2) The perfectly price-discriminating monopolist in this diagram will produce _____ units of output, and a single-price monopolist would produce ______ units of output.

$10 < PU < $16

(Figure: Price-Discriminating Monopolist) Refer to the figure. Based on the demand curves for a monopolist's product in two different markets—Market A and Market B—if the monopolist were to charge a uniform price PU between the two markets, in which range would the price fall?

price of $16 in Market A and $10 in Market B.

(Figure: Price-Discriminating Monopolist) Refer to the figure. In order to maximize profits, the monopolist should charge a:

Panel A

(Figure: Profits and Competitive Firms) Refer to the four panels in the figure. Which panel shows a competitive firm making an economic loss?

Panel C

(Figure: Profits and Competitive Firms) Refer to the four panels in the figure. Which panel shows a competitive firm making positive economic profits?

Panel B

(Figure: Profits and Competitive Firms) Refer to the four panels in the figure. Which panel shows a competitive firm making zero economic profits?

15 units.

(Figure: Two-Firm Industry) Refer to the figures. At a market price of $20, the total quantity supplied in the industry is:

45 units.

(Figure: Two-Firm Industry) Refer to the figures. At a market price of $25, the total quantity supplied in the industry is:

We can illustrate the degree of connectivity in an economy with this tool:

Atlas of Economic Complexity

Haircuts for men are often cheaper than haircuts for women, even when they are offered by the same stylist. Why might this be price discrimination?

Demand for haircuts for women might be more inelastic than demand for haircuts for men, and haircuts are impossible to arbitrage.

(Table: Oil Output) Refer to the table. If both countries abide by the cartel agreement (i.e., not cheat):

Each country earns $78.

a profit of $300

How much profit is the firm making at the profit-maximizing quantity?

When significant externalities exist: I. the market equilibrium is no longer efficient. II. the market equilibrium is only efficient if the externality is an external benefit. III. social surplus is not maximized. IV. the government may increase efficiency by imposing a tax on the market.

I and III only

Firms in competitive industries: I. can only charge a price equal to the market price. II. cannot charge any more than the market price. III. will earn less profit if they charge less than the market price.

I, II, and III

How did IBM price discriminate its laser printers?

IBM offered two different printers: a fast printer and a slow printer.

A market is considered perfectly competitive if: I. there is a lot of product differentiation among sellers. II. there are many sellers, each small relative to the total market. III. the product sold is similar across sellers. IV. there are only a few buyers.

II and III only

Bundling is expected to provide greater profits when the two bundled goods are: I. substitutes. II. goods that have high fixed costs and low marginal costs. III. very close complements.

II and III only

A firm should exit an industry if:

P- AC < 0.

A(n) ______ subsidy is a subsidy on a good with external benefits.

Pigouvian

A(n) ______ is a tax on a good with external costs.

Pigouvian tax

3; $15

The firm in this figure will hire ______ worker(s) at a wage of $10 and 2 workers at a wage of _______.

Barriers to entry include:

They are all barriers to entry.

[According to this week's video] Now, the experiencing self lives its life continuously. It has moments of experience, one after the other. And you can ask: What happens to these moments?

They are lost forever.

Governments create barriers to entry with licenses or other regulations that limit entry.

True

In the prisoner's dilemma, both players have an incentive to cheat, even though they would both be better off if they both cooperated.

True

One sign of the cartel power of the NBA is the use of salary caps.

True

$24; $4

Two firms in an industry act as a cartel, with each firm agreeing to charge a price of $16 and sell two units of output. If one of them cheats and produces two more units of output, the cheating firm's total revenue increases by ______ and the other firm's total revenue decreases by ______.

6.

Use the figure. The profit-maximizing output for this firm is:

$100,000

What is the profit or loss for this monopoly?

A compensating differential is:

a difference in wages that offsets differences in working conditions.

According to the Coase theorem, which situation would MOST likely result in a private bargaining solution and yield an efficient market?

Your neighbor's dog routinely gets out of his yard and does his "business" in your yard.

An external cost is:

a cost paid by people other than the consumer or the producer trading in the market.

Tradable allowances for pollution:

allow firms to reduce pollution levels at lower costs.

In the prisoner's dilemma, a dominant strategy:

always exists.

(Table: Christie' and Sotheby's) Each cell of this table presents the revenues earned by the auction houses, Christie's and Sotheby's. Revenues are based on the type of commission each firm charges its clients, as well as what commission the other charges. Christie's revenues are listed first in each cell, then Sotheby's. If both firms cooperate and act like a cartel:

both Christie's and Sotheby's will charge a high commission.

Airlines price discriminate prominently by charging _______ more than _________.

business travelers; vacationers

In general, wages are determined:

by the skills of the worker and the productivity of the entire economy.

An individual's labor supply curve:

can be either positively or negatively sloped, or perfectly inelastic.

An individual labor supply curve:

can be positively sloped, vertical, or negatively sloped at different ranges.

Transaction costs:

can keep private parties from solving externality problems.

A union can lower wages by:

causing work stoppages, which slow down the entire economy.

A newly imposed binding minimum wage:

decreases employment.

Overfishing in oceans is a prisoner's ______ outcome.

dilemma

A free market with externalities ______ social surplus.

does not maximize

Good-looking people:

earn more than otherwise comparable less attractive people.

Customer-based discrimination is weakened by:

economic growth.

In the Wealth of Nations, Adam Smith wrote: Pecuniary wages and profit, indeed, are everywhere in Europe extremely different according to the different employments of labour and stock. But this difference arises partly from certain circumstances in the employments themselves, which, either really, or at least in the imaginations of men, make up for a small pecuniary gain in some, and counterbalance a great one in others; and partly from the policy of Europe, which nowhere leaves things at perfect liberty. (Book 1, Chapter 10) Which idea was Smith describing?

labor market issues

Oligopolies are:

large enough to change industry output and affect market prices.

Firms earn negative profit when price is:

less than average cost.

Evidence suggests that résumés with names closely associated with African Americans received:

less than average number of interview requests.

An external benefit in a market will cause the market to produce:

less than is socially desirable.

(Table: Christie' and Sotheby's) Each cell of this table presents the revenues earned by the auction houses, Christie's and Sotheby's. Revenues are based on the type of commission each firm charges its clients, as well as what commission the other charges. Christie's revenues are listed first in each cell, then Sotheby's. Christie's dominant strategy is ______ commission and Sotheby's dominant strategy is ______ commission.

low; low

Oligopolies tend to set prices:

lower than monopolies but higher than competitive markets.

Prices in an oligopolistic market are likely to be:

lower than that of a monopoly market.

Firms operating in a cartel have a large incentive to cheat on the agreement by:

lowering prices and increasing production

When external benefits are significant:

market output is too low.

When external costs are present in a market:

market prices send incorrect signals.

An individual's labor supply curve:

may be backward bending if the wage is high enough.

Discrimination by customers:

means that some customers might not want to do business with firms that hire certain workers.

A cartel member has _____ incentive to increase quantity than a standard monopolist.

more

Even when gas stations and grocery stores are close enough to share a parking lot, gas stations will typically charge much more for candy bars. This kind of price discrimination occurs because grocery store patrons have a:

more elastic demand curve.

Cheaters in cartels make ________ profit when the other cartel members ________ their promise.

more; keep

Economists call a single firm that can supply the entire market at a lower cost than two or more firms a __________ monopoly.

natural

A firm receives the largest profit from cheating on a cartel agreement when:

none of the other cartel members cheats.

According to one of last week's video: What's the process that's having the same effect in cultural evolution as sex is having in biological evolution?

none of the others

According to this week's podcast: ___________ thought haggling was just fundamentally unfair.

none of the others

A compensating differential is mainly a cause of a difference in wages because:

of differences in working conditions.

A market dominated by a small number of firms is called a(n):

oligopoly.

Antibiotics may be ________ since people consider only the ________.

overused; private and not the social costs of consumption

Discrimination by employers:

tends to break down quickly because employers are always looking to hire the most productive workers at the lowest wages in order to maximize profits.

According to this week's podcast: the 2.4 billion euro fine goes to:

the European Commission

If a monopolist begins to perfectly price discriminate,:

the deadweight loss will be eliminated as output expands to its efficient level.

Economists study decreasing cost industries in order to explain:

the existence of industry clusters.

For a small firm in an extremely competitive industry, marginal revenue is always equal to price because:

the firm has no ability to influence the market price.

Economists call the time after all exit or entry has occurred:

the long run.

A firm will hire a worker as long as:

the marginal product of labor is greater than or equal to the wage earned by the worker.

A firm will continue to hire workers as long as:

the marginal product of labor is greater than the wage.

Firms will hire additional workers as long as

the marginal revenue of that worker is greater than the worker's wage.

When external benefits are present in a market:

the market outcome is inefficient.

A single person's supply curve for labor slopes down when:

the person starts taking part of their income as leisure.

A natural monopoly occurs when:

there are economies of scale over the relevant range of output.

If two products from a company are designed to perfectly complement each other (in a one-to-many ratio), then the products are:

tied.

(Table: Mary, Silvia Payoff Table) Refer to the table. Mary and Silvia are producers. If Mary cheats, what is Silvia's dominant strategy?

to cheat and earn 15

(Table: Mary, Silvia Payoff Table) Refer to the table. Mary and Silvia are producers. If Silvia cooperates, what is Mary's dominant strategy?

to cheat and earn 40

When external benefits are present, the market price is ________, however when external costs are present, the market price is ________.

too high; too low

Firm profit is defined as:

total revenue minus total cost.

Tradable pollution permits:

will be more valuable to firms that can reduce pollution only at high costs

In a competitive market, each firm earns ________ economic profits, whereas firms in a successful cartel will earn ________.

zero; positive economic profits