Why do barriers to entry create market power?
What will be an ideal response?
Barriers to entry create market power because it is difficult for firms to enter even if the incumbents are enjoying excessive profits (firms in the market would have the ability to determine price due to lack of competition). In a competitive market with no entry barriers, economic profits would be bid down to zero by entry.
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An economic model:
A. should include all possible details. B. always accurately predict cause and effect. C. should make clear assumptions. D. will never use simplifying assumptions.
The demand for money is given by Md = $Y (0.3 - i), where $Y = 100 and the supply of money is $20. a. What is the equilibrium interest rate? b. What is the impact on the interest rate if central bank money is increased to $25?
What will be an ideal response?
Much of the growth in ________ is due to export-manufacturing, and ________ have based their growth on resource extraction.
A. South America; North American countries B. Western Europe; the former Soviet-bloc countries C. Sub-Saharan Africa; most Central American nations D. Southeast Asia; many African nations
Refer to the information provided in Figure 32.3 below to answer the question(s) that follow.
Figure 32.3Refer to Figure 32.3. Suppose the economy is at Point A. According to the rational expectation theory, an unanticipated decrease in money supply
A. leaves the economy at Point A. B. moves the economy to Point B. C. moves the economy to Point C. D. moves the economy to Point D.