A competitive economy assumes each industry consists of a:
A. large number of small firms facing a large number of small buyers.
B. large number of small firms facing a few large buyers.
C. few small firms facing a few small buyers.
D. few large firms facing a large number of small buyers.
Answer: A
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Which of the following would cause a decrease in the price of a good?
A) an increasing shift in the supply of a good and no shift in demand B) a decreasing shift in the supply of a good and no shift in demand C) an increasing shift in the demand for good and no shift in supply D) an increasing shift in the demand for good and a decreasing shift in supply
Which of the following is a difference between a corrective tax and a corrective subsidy?
a. A corrective tax leads a market to allocative efficiency, while a corrective subsidy does not lead to allocative efficiency. b. A corrective tax eliminates deadweight loss, while a corrective subsidy does not eliminate deadweight loss. c. A corrective tax is useful in the case of negative externalities, while a corrective subsidy is useful in the case of positive externalities. d. A corrective tax operates by decreasing the private cost of production, while a corrective subsidy operates by decreasing the private benefit of consumption.
The annual volume of foreign exchange transactions:
A. is more than 18 times larger than world GDP. B. is one-eighth the world GDP. C. is three times the world trade volume. D. is small relative to most financial markets.
If firms in a monopolistically competitive industry experience short-run losses
A. firms increase prices further, until they make at least a normal return. B. some firms exit the industry, causing the demand curves for the remaining firms to shift to the right until they earn a normal profit. C. some firms would like to exit the industry but find they cannot. D. firms increase advertising spending to increase demand, until they make at least a normal return.