Some economists believe that the economy benefits from firms having market power. Which of the following is an argument that has been made to support this position?
A) Large firms are better able than small firms to spend funds on research and development required to develop new products.
B) Competition is very rare in the U.S. economy and few new products are produced by smaller, competitive firms.
C) Research has shown that the deadweight loss from monopolies is a small percentage of the value of production in the United States.
D) Large firms can afford to lobby the U.S. government in order to impose restrictions on imports and reduce the outsourcing of jobs to other countries.
Answer: A
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Assume that Coca-Cola and Pepsi-Cola are substitutes. A rise in the price of Coca-Cola will have which of the following effects on the market for Pepsi?
a. A movement down along the Pepsi demand curve. b. A rightward shift in the Pepsi demand curve. c. A movement up along the Pepsi demand curve. d. A leftward shift in the Pepsi demand curve.
The worst remedy for curing the U.S. trade deficit is to
a. increase U.S. personal saving. b. reduce the budget deficit. c. encourage all nations to lower trade barriers. d. limit imports by imposing tariffs, quotas, and other trade restrictions.
In each of the following scenarios, state whether the labor supply curve would shift to the left, to the right, not shift at all, or if the shift is ambiguous because there is more than one effect and they would move the curve in opposite directions.(a)The stock market rises sharply.(b)Fewer teenagers work while in school than before.(c)A large fraction of the population flees the country because of a bird flu epidemic.(d)The expected future wage declines and the stock market crashes.(e)The current real wage rate rises.
What will be an ideal response?
Classical macroeconomists think that the best models are ________ and that inflation expectations ________.
A. dynamic; do not matter B. static; do not matter C. dynamic; matter D. static; matter