For years, economists believed that market structure explained the ability of some firms to earn economic profits
For example, firms in industries with little competition and high barriers to entry would earn higher profits than firms in competitive industries with low entry barriers. Which of the following has caused economists to question this explanation and seek other explanations for why firms are profitable?
A) In recent years, new technologies have increased the potential entry of new firms in industries with high entry barriers.
B) Studies have shown that, on average, firms in competitive industries earn higher profit rates than firms in industries with little competition.
C) The market structure explanation fails to explain how firms in the same industry can have very different levels of profit.
D) Studies have shown that firms in industries that have little competition and high entry barriers are not very profitable. Economists conclude from this that some competition is necessary in order to force firms to lower their costs and develop products that satisfy new consumer demands.
C
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The figure above shows the market for coffee If the government pays the coffee producers a subsidy and production increases to 30 million pounds per day, the deadweight loss is
A) zero. B) $7.5 million. C) $15 million. D) $10 million.
One group of people uses New York City subways only during rush hour to travel to and from work. Another group uses them only in midday for leisure activity. If New York City wants to increase transit fares with the smallest possible reduction in revenue, for which group should it increase the fare?
a. The rush-hour group because its demand for subway service is more elastic than that of the midday group. b. The rush-hour group because its demand for subway service is less elastic than that of the midday group. c. The midday group because its demand for subway service is more elastic than that of the rush-hour group. d. The midday group because its demand for subway service is less elastic than that of the rush-hour group. e. It doesn't matter because both groups have the same elasticity of demand.
The information in the table shown:
This table shows the price-level adjustment as compared to the United States.
A. allows us to compare the standard of living in one country to another.
B. has been indexed to the United States.
C. shows that the typical good in Australia is more expensive than it is in the United States.
D. All of these statements are true.
Although the Fed can destroy money, it is impossible for the Fed to create money out of thin air
Indicate whether the statement is true or false