According to contestable market theory:
A. barriers to entry are much less important than market structure in determining the degree of price competition in an industry.
B. barriers to entry and market structure are both important in determining the degree of price competition in an industry.
C. barriers to entry are much more important than market structure in determining the degree of price competition in an industry.
D. neither barriers to entry nor market structure affects the degree of price competition in an industry.
Answer: C
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Use the following production possibilities frontiers to answer the next question.
Curve (a) is the current frontier for the economy. Focusing on curve (a), point N suggests that the economy currently produces
A. less goods for the future than at point P. B. more goods for the future than at point P. C. less goods for the present than at point P. D. a combination of output that is less than its potential.
Explain dumping
What will be an ideal response?
Monopoly is characterized by
A. a horizontal demand curve. B. many close substitutes. C. no barriers to entry. D. a downward sloping demand curve.
If Country A’s opportunity cost of corn is lower than Country B’s opportunity cost of corn, then
a. Country A has a comparative advantage in the production of corn. b. Country A has an absolute advantage in the production of corn. c. Country A should import corn from Country B. d. Country B should produce just enough corn to satisfy its own residents’ demands.