Suppose that there are two industries, A and B. There are five firms in industry A with sales at $5 million, $2 million, $1 million, $1 million, and $1 million, respectively. There are four firms in industry B with equal sales of $2.5 million for each firm. The four-firm concentration ratio for industry A is:
A. 1.0.
B. 0.7.
C. 0.8.
D. 0.9.
Answer: D
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Two people are involved in a borrower/lender situation, and one person has superior knowledge of its own current and future prospects over the other person. This is known as
A) symmetric information. B) deceptive knowledge. C) preventable information. D) asymmetric information.
Marginal cost is calculated as
A) total cost divided by output. B) the increase in total cost divided by the increase in output. C) the increase in total cost divided by the increase in labor, given the amount of capital. D) total cost minus total fixed cost.
The cost of capital is:
a. concerned with what a firm has to pay for the capital b. the rate of return required by investors c. determined in the capital markets d. all of the above e. b and c only
In which of the following market structures does free entry and exit play an important role in the long-run equilibrium outcome? (i) perfect competition (ii) monopolistic competition (iii) monopoly
a. (i) only b. (i) and (ii) only c. (ii) and (iii) only d. (i), (ii), and (iii)