Arnold Harberger was the first economist to estimate the loss of economic efficiency due to market power. Harberger found that
A) the loss of economic efficiency in the U.S. economy due to market power was small around 1973, about 1 percent of the value of production, but has since grown to about 10 percent.
B) because of the increase in the average size of firms since World War II, the loss of economic efficiency has been relatively large, about 10 percent of the value of total production in the United States.
C) the loss of economic efficiency in the U.S. economy due to market power was less than 1 percent of the value of production.
D) although the number of monopolies was small, the large number of other non-competitive firms in the United States resulted in a large loss of economic efficiency, about 20 percent of the value of total production.
C
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Starting from long-run equilibrium, a large tax increase will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. recessionary; lower; potential B. expansionary; lower; potential C. expansionary; higher; potential D. recessionary; lower; lower
All else equal, when oil prices increase, some uneconomical sources of oil tend to become more economical, and this will ________ proven reserves of oil and ________ the number of years it will take to deplete the stock of oil
A) increase; increase B) increase; decrease C) decrease; increase D) decrease; decrease
When break-even investment is subtracted from investment per worker, the result is
A) the change in the capital-labor ratio. B) saving. C) the steady state. D) capital stock dilution.
Barriers that prevent the entry of new firms may arise because: a. economies of scale exist over a substantial range of industry demand. b. marginal revenue is less than average total cost
c. the government protects some firms from competition. d. of both (a) and (c).