When a proposed merger between two companies is reviewed by the government, the relevant market is defined by
A) how elastic the demand is for each firm's product.
B) how much advertising is done in the industry.
C) whether or not there are close substitutes for the products of the two firms.
D) counting the number of firms that produce the same product.
C
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Willie Stand obtains a patent on his new invention, the bipod. After twenty years,
a. he can renew his patent b. new entrants will begin bipod production if price exceeds average variable cost c. new entrants will drive up the price of the bipod d. Willie will eventually earn no more than a normal profit e. Willie will continue to earn a positive economic profit, because entry will not affect the price of bipods
The MR=MC rule
A) applies to price-makers only. B) does not vary by market structure. C) is only true in competitive markets. D) applies to price-makers that have MR=P.
It is true that the distribution process carried out by the price system
A. accomplishes the task more efficiently than central planners would. B. favors the rich. C. is superior to other rationing mechanisms because it is able to pay attention to individual consumer preferences. D. All of these responses are true.
An increase in government purchases will increase GDP by an amount equal to the change in government purchases times the expenditure multiplier
a. True b. False