Why Is It Difficult for Economists to Predict the Price

question 247

Multiple Choice

Why is it difficult for economists to predict the price and output policy that will emerge in oligopolistic markets?

• A) Economists cannot determine if barriers to entry exist in a market.
• B) Economists cannot predict the reactions that firms will have to the actions and decisions of other firms.
• C) The government prevents economists from acquiring the information that would lead to good predictions.
• D) Firms have a set price and output policy, but the policy is concealed to discourage competition.

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Definitions:

Petty Cash Receipt

A document used to record small, miscellaneous expenses paid with petty cash funds.

Cash Equivalents

Short-term, highly liquid investments that are easily convertible into a known amount of cash and close to their maturity.

Commercial Paper

An unsecured, short-term debt instrument issued by corporations, typically for the financing of accounts receivable, inventories, and meeting short-term liabilities.

U. S. Treasury Bills

Short-term government securities issued by the United States Department of the Treasury with maturity periods of one year or less.