According to the text, a convincing argument against concentration of market power is that
A. The exercise of market power results in a higher price.
B. Market power increases incentives for innovation and invention.
C. Market power results in lower barriers to entry.
D. Large firms can produce more efficiently than small firms because of diminishing returns in production.
Answer: A
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Which of the following reforms could potentially reduce spending on health care without reducing the effectiveness of health care received?
A) reimburse consumers for preventive health care expenditures so as to avoid costly emergency medical treatments in the future B) give every citizen a fixed amount of money that can only be spent on health care services C) standardize the tax treatment of employer-based health insurance benefits and private spending on health care D) nationalize health care so that all health services are government funded and operated
The Federal Reserve often begins to tighten monetary policy after a trough in the business cycle because of
A) the impact lag. B) the recognition lag. C) bureaucratic indecision. D) the time necessary to get Congress to act.
The Consumer Price Index (CPI) measures inflation for every individual
A) True, the weights used in calculating the CPI are adjusted for every individual in the country. B) True, people all face the same prices and therefore face the same inflation. C) False, the CPI uses weights based on how much each product represents in the typical household budget. D) False, the CPI doesn't measure inflation.
Long-run equilibrium under monopolistic competition requires that
a. the demand curve intersect the average cost curve. b. the demand curve be tangent to the average cost curve. c. price be equal to marginal cost. d. quantity produced be at the point where average cost is at a minimum.