The underground economy—the informal sector—can be a significant drag on the economies of developing countries. Why are firms in the informal sector often less efficient than firms in the formal sector?
What will be an ideal response?
Entrepreneurs of the firms in the informal sector limit their investments in capital equipment because they are afraid that the firms will someday be shut down. The workers in the firms, consequently, have less capital equipment to work with.
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When a country's real exchange rate appreciates,
A) its nominal exchange rate must also have appreciated. B) its nominal exchange rate must have depreciated. C) it can trade its goods for fewer units of foreign goods. D) it can trade its goods for more units of foreign goods.
Suppose two industries had the same four-firm concentration ratio, but one industry was an unbalanced oligopoly and the other was balanced. The market share of the fourth largest firm in the unbalanced oligopoly will be
a. smaller or larger than the market share of the first largest firm in the unbalanced oligopoly b. smaller than the market share of the fourth largest firm in the balanced oligopoly c. larger than the market share of the first largest firm in the balanced oligopoly d. more than 20 percent e. the same as the fourth largest firm in the balanced oligopoly
Congestion pricing
A. is a tax. B. keeps nasal passages clear. C. is never efficient. D. all of these answer options are correct.
The vertical and horizontal axes intercepts of the budget line represent the:
A. quantity of goods that will be purchase if only that good is purchased. B. preference of one good compared to another good. C. quantity of each good that is outside the consumer's income. D. only two choices that will spend the entire budget.