Explain why X-inefficiency is likely to be more prevalent in an industry in which firms have market power
What will be an ideal response?
The assumed goal of firms is to maximize profits, i.e., the difference between total revenues and total costs. X-inefficiency refers to the situation in which firms have fewer incentives to minimize the costs of production.When there is less competition, there is not as much downward pressure on price and, therefore, total revenues. As such, there is less pressure on the firm to minimize costs to maintain a particular level of profit.
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A lower domestic price level tends to:
a. reduce aggregate expenditures and lower the aggregate quantity of goods and services supplied. b. reduce aggregate expenditures and lower aggregate demand. c. reduce aggregate expenditures and raise aggregate demand. d. increase aggregate expenditures and raise the aggregate quantity of goods and services demanded. e. increase aggregate expenditure on foreign goods and lower net exports.
Which of the following properties should a commodity have to be considered as money?
a. It should be scarce and rare. b. It should be perishable. c. It should be indivisible. d. It should be unpredictable in value. e. It should be homogenous in nature.
The average expected rate of return is a:
A. Volume-weighted average B. Price-weighted average C. Probability-weighted average D. Value-weighted average
Which of the above schedules represent(s) a regressive tax?
a. V only b. III and V c. IV only d. I only