Firms do not have market power in which of the following market structures?
A) perfect competition and monopolistic competition
B) perfect competition only
C) monopoly
D) oligopoly
B
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One effect of adverse selection in a market is that the equilibrium quantity of the product may
be smaller than it would have been if there were no asymmetric information problems. Indicate whether the statement is true or false
The tendency for people to behave in a riskier way or to renege on contracts when they do not face the full consequences of their actions is called:
A. moral hazard. B. adverse selection. C. counter information. D. collective bargaining.
If two nations have different per capita income levels and their rates of economic growth are identical, then the absolute per capita income differential:
A. will remain constant. B. may either widen or diminish. C. will diminish. D. will widen.
A trade deficit refers to a situation where:
A. Government spending (including transfer payments) exceeds tax revenues B. A nation's purchases from other nations are less than its sales to other nations C. Assets are less than liabilities D. Exports are less than imports