What is the rule for efficient output selection and how does the competitive market achieve it?
What will be an ideal response?
The rule is MC = MU. In competition, MC = P. Consumer decision making brings about P = MU. Since P for a particular good is the same for both buyers and sellers, MC = P = MU. So the competitive market achieves MC = MU.
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In highly contestable markets, increases in concentration will enhance market power
a. True b. False Indicate whether the statement is true or false
According to the No Marginal Improvement Principle for Boundary Choices, if X* is a best choice, then:
A. if only a marginal increase in the activity level is possible, the MB ? MC at X*. B. if only a marginal increase in the activity level is possible, the MB ? MC at X*. C. if only a marginal decrease in the activity level is possible, the MB ? MC at X*. D. MB = MC at X*.
Suppose the government of New Country has fixed the value of its currency, the New Peso, at $1 per New Peso, but the market equilibrium value of the New Peso is $0.50 per New Peso. In order to maintain the official value of the New Peso the Central Bank of New Country must either ________ domestic interest rates, or ________ the supply of international reserves by purchasing New Pesos.
A. lower; decrease B. raise; increase C. lower; increase D. raise; decrease
Which of the following could be called an unfunded mandate imposed by the federal government to be carried out by state and local governments, without enough funds to cover the cost of the program?
A. the No Child Left Behind Act of 2001. B. the requirement that states and localities hire new police officers by the Department of Homeland Security. C. the requirement that states carry out election reform, as a result of voting irregularities in the 2000 election. D. all the choices.