Suppose one firm accounts for 55 percent of the global market share for a product, while 147 other firms account for the remaining 45 percent of the market
With such a large number of buyers and sellers, is this market likely to be competitive? Explain your answer.
A large number of buyers and sellers ensure that the market is competitive only if a single firm's choice of how much to produce does not affect market outcomes. However, in this case, if the firm that produces 55 percent of the output in the market decides to reduce production, this is likely to significantly affect the market price of the product. So, a large number of sellers in a market does not automatically ensure that it is competitive; it is the share of output that each firm produces that matters.
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In the multiple-polluter case for a pollution permit system, suppose Firm 1 and Firm 2 face marginal abatement cost functions of MAC1 = 4.5A1 and MAC2 = 2.25A2, respectively. If the government issues each firm tradeable pollution permits such that each has to abate 10 units of pollution, then, based on this allocation,
a. the two firms have no incentive to trade b. firm 1 has an incentive to buy a permit if the price is greater than $45 c. firm 2 has an incentive to buy a permit if the price is above $22.50 d. firm 2 will be willing to sell a permit if the price is above $22.50
Anchoring occurs when:
A. someone's choices are linked to prominent but patently irrelevant information. B. someone's choices are linked to prominent and relevant information. C. someone's choices are made in the absence of relevant information. D. someone's choices are based solely upon proven and relevant information.
An oligopoly showing no economic profit or loss has
a. an AR curve tangent to the lowest point of its ATC curve. b. an AR curve tangent to its ATC curve to the left of the lowest point. c. an MR curve above its AR curve. d. an AR curve that crosses its ATC curve.
The major problem with direct controls as an environmental protection measure has been
a. inept administrators. b. corrupt judges. c. illegal dumping. d. legislation with no teeth.