Why do economists like competitive markets?
A. Competitive markets result in optimal and efficient levels of production.
B. Competitive markets result in lower levels of production.
C. Competitive markets are the best way to allocate every good or service.
D. Competitive markets result in high prices and profit for sellers.
Answer: A
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Economists are skeptical about the degree to which predatory pricing is used because
a. "price wars" are rarely observed in actual markets. b. when used as a warning to potential rivals, predation has minimal value. c. buy-outs are less costly than predation and have no offsetting disadvantages. d. firms can easily counter predation by "laying low" or borrowing funds.
Which of the following statements is TRUE about the difference between the public debt and the government budget deficit?
A) The public debt is a flow measure and the government budget deficit is not a flow measure. B) There is no relationship between the public debt and the government budget deficit since one is a stock measure and the other is a flow measure. C) The public debt always increases while the government budget deficit may increase or decrease. D) The public debt for this year will increase or decrease depending upon whether there is a government budget deficit or a government budget surplus.
Students who leave school in the spring and look for work are one source of ________
A) structural unemployment B) cyclical unemployment C) frictional unemployment D) business-cycle fluctuations
Suppose Country Y produces only corn and clothing using only two inputs-land and labor. Production of corn requires an intensive use of land whereas clothing is a labor-intensive good. If the price of corn increases by 15 percent and the price of clothing remains constant, the Stolper-Samuelson theorem predicts that in the long run
A. the wage rate will increase by more than 15 percent. B. the rental rate of land will increase by 15 percent. C. the rental rate of land will increase by more than 15 percent. D. the wage rate will remain unchanged.