The essence of market power is the ability to alter the price of a product.
Answer the following statement true (T) or false (F)
True
If a firm can change market prices by altering its output, then it has market power.
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Which of the following theories of business cycles implies that efficient markets, characterized by perfect information and by rational business firms and households, will still be characterized by business cycles?
A) Lucas's rational expectation model B) the natural rate hypothesis C) the real business cycle model D) classical theory
Even though households do not actually purchase certain items, the government estimates and adds to the consumption component what the household would pay for these items in the marketplace. An example of this type of item is
a. a car that an individual builds from parts of old cars b. food that a farm family grows for themselves c. a pond that a household member digs by hand d. police and fire protection e. a barn that a household builds on their own property
Where marginal cost is less than average cost,
a. opportunity cost must have been excluded from the calculation of marginal cost. b. marginal cost must be falling. c. marginal cost must be rising. d. marginal cost may be rising, falling, or constant.
Which of the following is not true about production possibilities frontiers?
A) moving from one point to another on a PPF incurs a tradeoff B) economic growth is shown by shifting the PPF outward C) unemployment of resources is shown by shifting the PPF inward D) a PPF can shift inward or outward