If workers have better information about their own ability to work than employers do, which of the following situations is present?
A. unemployment
B. asymmetric information
C. discrimination
D. moral hazard
Answer: B
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Compare and contrast the potential for a perfectly competitive firm and a monopolistically competitive firm to earn positive economic profits in the short run versus the long run. Explain your reasoning
What will be an ideal response?
Why do historians argue that there was a mixture of enterprise, partly private and partly governmental, in building our transportation system?
(a) Private individuals took the initiative and were able to extract special privileges and financial assistance from government for the purpose of enhancing their profits. (b) Political leaders, who wanted transportation improvement for reasons of local or national ambition, took the initiative and coaxed private enterprise into building the transportation system by the offer of special financial advantages. (c) The sheer size of the investment required for a transportation system was beyond the capability of private enterprise alone. (d) All of the above ideas have been used by historians to explain the mixture of enterprise in building our transportation system.
What is the free-rider problem?
If a contestable market has only one seller, which of the following will keep the seller from producing inefficiently and charging a price that generates long-run economic profits?
a. government regulations b. low costs of entry into and exit from the market c. substantial economies of scale that provide a competitive advantage to large firms in such markets d. the threat of a government takeover of the firms in these markets