Microeconomics Question from Walter E. Williams:Edit
Give very brief answers to the following:
- (a) Collusions have a natural tendency to break down.
- (b) "Bad money tends to drive out good money."
- (c) To incur a cost is equivalent to saying that one has sacrificed an opportunity.
- (d) On a television interview a famous theatrical producer expressed delight that tickets to his performance were sold out for the next five months. Explain why he might have cause to be sad instead.
- (a) Competition moves from the market to the boardroom: Collusions have three major reasons for dissolving:
- 1) incentive to cheat, as different firms have different marginal costs;
- 2) difficulty in deterring entry of competitors;
- 3) policing costs
- (b) WEW-013
- (c) The cost of any chosen act is the most valuable forsaken alternative opportunity.
- (d) He could have charged a higher price and still sold out. Advance sell out is an indication that prices were set too low.
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