Under what conditions does an oligopoly market result in the same outcome as perfect competition? What does this imply for the oligopoly's long-run profits?
What will be an ideal response?
Oligopoly results in the perfectly competitive outcome when markets are contestable and oligopolists do not or are not successful at colluding. Because prices are pushed to their long-run average costs, positive profits will not persist.
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What is meant by risk neutrality?
What will be an ideal response?
Some economists and policymakers who are in favor of government-provided health care believe that providing health care will generate
A) more adverse selection. B) additional moral hazard. C) positive externalities. D) greater asymmetric information.
What is the key macroeconomic issue of the short run and what is the key macroeconomic issue of the long run?
What will be an ideal response?
In an attempt to manage expectations, a central bank may prefer to announce an unconditional commitment, because an unconditional commitment ________ than a conditional commitment
A) is inherently more credible B) may have an impact on expectations that is stronger C) places fewer constraints on policy makers D) is less likely to have unintended consequences