Antitrust activities can cause inefficiencies by:
A. breaking up a natural monopoly.
B. creating many small firms that cannot capture available economies of scale.
C. Both of these statements are true.
D. Neither of these statements is true.
Answer: C
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Economic theory predicts
A) balanced budgets are impossible to achieve through a democratic political process. B) budget surpluses are impossible to achieve through a democratic political process. C) budget deficits are likely to occur through a democratic political process. D) the absolute size of the budget will be systematically reduced in the long run through democratic political processes.
The Fed's dual mandate is to pursue the goals of
A) high employment and price stability. B) interest rate stability and financial market stability. C) rapid economic growth and low inflation. D) interest rate stability and a balanced budget.
A sudden fall in the market demand in a competitive industry leads to
a. A short run market equilibrium price lower than the original equilibrium b. A market equilibrium price higher than the short run price c. Some firms exiting the market d. All of the above
The numerical value of a price elasticity represents the percentage amount by which the quantity demanded changes when the price
a. increases by 1 unit b. changes by 1 percent c. is in equilibrium d. is fixed in the market e. falls by 1 dollar