According to the standard competitive model, industries with increasing returns would not be profitable. However, economist Paul Romer argues that many industries may be experiencing increasing returns because
a. many important inputs are common property and therefore equally available to all firms.
b. many important inputs may be nonrivalrous so that there is no limit to how much they can be used.
c. of a decline in the number of monopsonistic firms in labor markets.
d. of an increase in the number of firms that are natural monopolies.
b. many important inputs may be nonrivalrous so that there is no limit to how much they can be used.
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A measure of how much the coefficient would vary in regressions based on different samples is called:
A) standard error of the estimated coefficient. B) F-statistic. C) partial F-statistic. D) t-statistic.
What is the Lucas critique, and why was it so important to macroeconomists in the 1970s?
What will be an ideal response?
Which of the following is not true of a monopolistically competitive firm?
A. The firm will maximize profits by producing where MR = MC. B. The firm will not likely earn an economic profit in the long run. C. The firm will shut down if price is less than average variable cost. D. The firm will produce an efficient quantity where average total cost is minimized.
In a perfectly competitive market, when the price is below the minimum average total cost for all firms:
A. economic profits will be equal to zero. B. the price will eventually rise once enough firms have left the market. C. firms will likely enter the market. D. accounting profits will be positive.