Economists tend to be concerned about entry barriers. Why are entry barriers so important?
What will be an ideal response?
Economists see barriers as the primary reason why monopoly and oligopoly occur. In the absence of barriers, neither type of industry could remain viable or in the absence of the barriers, contestable markets would give results similar to those of competition. It is barriers that lead to the undesirable consumer utility results of P > MC, and other aspects of firms which are unresponsive to consumer wishes. Finally, barriers can lead to economic profit in long-run equilibrium. However, most economists are less concerned about profits than about efficiency.
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Which of the following observations is true? a. Monopolistically competitive sellers are price takers
b. Monopolistically competitive sellers treat price in the same manner as in perfect competition. c. Monopolistically competitive sellers regard price as a given by market conditions. d. Monopolistically competitive sellers are price makers.
The largest part of gross domestic product in the United States is
a. investment. b. consumption. c. government expenditure. d. trade balance.
Which of the following were descendants of the Standard Oil Trust?
A. Exxon B. Mobil C. Marathon Oil D. All of the choices are correct.
Refer to the above table. What is the absolute price elasticity of demand when a price rises from $8 to $8.50?
A. 1.94 B. 5.15 C. 0.194 D. 0.515