One assumption of the model of perfect competition is that entry into the market is easy. This implies that:
a. there are government licensing requirements for a firm to enter the market.
b. there are no significant economies of scale relative to the size of the market.
c. one firm has gained a patent in the industry.
d. significant economies of scale do exist in the industry.
e. there is no government intervention.
b
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Tracy and Amy are playing a game in which Tracy has the first move at X in the decision tree shown below. Once Tracy has chosen either the top or bottom branch at X, Amy, who can see what Tracy has chosen, must choose the top or bottom branch at Y or Z. Both players know the payoffs at the end of each branch. 
If before Tracy chose, Amy could make a credible commitment to choose either the top or bottom branch when her turn came, then we would expect Tracy to get a payoff of ________ and Amy to get a payoff of ________.
A. 75; 150 B. 125; 125 C. 300; 200 D. 25; 225
What information do you need to draw your budget line? What is your budget line? What does it show for any pair of goods?
What will be an ideal response?
Adverse selection occurs when those ________ likely to get ________ insurance payoffs are the ones who want to purchase insurance the most
A) least; large B) least; small C) most; large D) most; small
Two farmers, A and B, each apply 100 tons of manure on their fields. To reduce manure runoff, the government has decided to require a permit for each ton of manure applied. The government gives each farmer 50 tradeable permits. Farmer A incurs losses of $25 for each ton of manure he does not apply, and Farmer B incurs losses of $50 for each ton of manure he does not apply. After permit trading,
we would expect that a. farmer A will no longer apply manure, and farmer B will not reduce his manure application at all. b. farmer B will no longer apply manure, and farmer A will not reduce his manure application at all. c. farmer A and B will each apply 50 tons of manure. d. farmer A will apply 25 tons of manure, and farmer B will apply 50 tons of manure.