A contestable market is one where:
A. there are infinitely many firms.
B. entry necessarily occurs.
C. there is the legitimate threat of entry.
D. firms can maintain the monopoly price.
Answer: C
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The labor demand curve represents the relationship between the quantity of labor demanded at:
A) different income tax rates. B) different values of average product of labor. C) different wage rates. D) different prices of the good that labor is used to produce.
What is the historical relationship in the United States between the unemployment rate and recessions?
A) The relationship depends on whether or not the price level is also changing. B) The unemployment rate rises during a recession and turns negative during the subsequent recovery. C) The unemployment rate rises shortly before a recession begins and declines shortly before it ends. D) The unemployment rate rises soon after a recession has begun and starts to decline sometime after the recovery has started. E) There is no regular or systematic link that can be discerned from the data.
A plausible elasticity of investment with respect to the user cost is
A. 0.52 B. 1.62 C. 0.40 D. 2.22
In the long run, a perfectly competitive industry is allocatively efficient because
a. the opportunity cost of resources needed to produce the last unit of output just equals the marginal value to consumers of the last unit b. it maximizes producer surplus c. consumer surplus could be larger if the price were lower d. production occurs at the lowest average total cost e. marginal costs are low