Describe the three general types of barriers
What will be an ideal response?
Barriers to entry can be divided into legal barriers, ownership barriers, natural barriers. Legal barriers occur when government action blocks competition in a market. For instance, the government could grant a public franchise, government license, patent, or copyright. In all cases, the government action prevents other firms from entering the market. Ownership barriers occur when a firm buys a significant portion of a natural resource. For instance, DeBeers controls over 80 percent of the world's diamond market. The last barrier to entry is a natural barrier. A natural barrier to entry occurs when economies of scale are so large that they make it possible for one firm to meet the entire market demand at a lower price than could two or more firms. In this case, the market will "naturally" evolve to become a monopoly as a larger firm uses its cost advantage to cut its price and drive its high-cost, smaller competitors out of business.
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Refer to Table 18-7. The tax system is
A) proportional throughout all levels of income. B) progressive throughout all levels of income. C) progressive between $10,000 and $12,000 of income and regressive between $16,000 and $22,000. D) regressive throughout all levels of income.
Which of the following best characterizes the profit of a buyer of a futures contract?
A) spot price at settlement minus futures price at purchase B) futures price at settlement minus spot price at purchase C) futures price at purchase minus spot price at settlement D) spot price at purchase minus futures price at settlement
If two bundles are on the same indifference curve, then
A) the consumer derives the same level of utility from each. B) the consumer derives the same level of ordinal utility from each but not the same level of cardinal utility. C) no comparison can be made between the two bundles since utility cannot really be measured. D) B and C.
When marginal utility is positive, then total utility is
a. negative b. decreasing c. zero d. increasing e. infinite