Compare and contrast the suitability of different market structure for fostering technological advance
What will be an ideal response?
Certain market structures may be best suited to foster technological progress. Each structure has strengths and limitations on this issue. (1) Pure competition: Strong competition gives firms the reason to innovate, but the expected rate of return on R&D may be low or negative for a pure competitor. (2) Monopolistic competition: These firms have a strong profit incentive to develop and differentiate products, but they have limited ability to obtain inexpensive R&D financing. It is also difficult for these firms to extract large profits because the barriers to entry are relatively easy. (3) Oligopoly: Although the size of firms makes them capable of promoting technological progress, there is little reason for them to introduce costly new technology and new products when they earn large economic profits without doing it. (4) Pure monopoly: This firm has little incentive to engage in R&D because its high profit is protected by high barriers to entry.
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In Irving Fisher's quantity theory of money, velocity was determined by
A) interest rates. B) real GDP. C) the institutions in an economy that affect individuals' transactions. D) the price level.
The Sherman Act of 1890 and the Clayton Act of 1914 were Antitrust Acts whose purposes included all of the following except
(a) The maintenance of a competitive economy (b) The prevention of monopolies, combinations and other conspiracies in restraint of trade (c) The prevention of price discrimination that reduces competition (d) The prevention of labor union activity that reduces competition in the labor market
Price leadership is an example of explicit collusion by oligopolies
a. True b. False Indicate whether the statement is true or false
Suppose there is a surplus in the money market
a. This could have been created by an increase in the money supply. The value of money will rise. b. This could have been created by an increase in the money supply. The value of money will fall. c. This could have been created by a decrease in the money supply. The value of money will rise. d. This could have been created by a decrease in the money supply. The value of money will fall.