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Quiz 7 (WK7) - Quiz 7(WK7 1(Points 2 2,000 packs of chewing...

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Quiz 7 (WK7) 1. Six firms with identical cost structures that produce chewing gum have formed a cartel. If the cartel produces the profit maximizing output level each firm should produce (Points: 2) 2,000 packs of chewing gum 6,000 packs of chewing gum 12,000 packs of chewing gum output levels that are indeterminate from this information 2. Predatory pricing is (Points: 2) often effective and a relatively inexpensive means of eliminating competition legal under the U.S. antitrust laws the practice by which a large, powerful firm attempts to drive its competitors out of the market by temporarily setting an artificially low price generally more effective when barriers to entry exist 3. The price-leadership model does NOT assume the (Points: 2) demand elasticity in response to an increase in price is different from the demand elasticity in response to a price cut industry is made up of one large firm and a number of smaller, competitive firms dominant firm maximizes profit dominant firm allows the smaller firms to sell all they want at the price the leader has set.
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