Restricting entry to a profession through licensing or certification requirements
A) increases welfare.
B) decreases welfare.
C) may increase or decrease welfare.
D) leaves welfare unchanged.
C
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Perfectly competitive firms are earning economic profits at a market price of $6 and an average total cost of $5. If new firms enter and increase the average total cost for all firms, the market price will ________ until ________.
A) increase; it reaches the new higher average total cost B) fall; it reaches the new higher average total cost C) fall; it reaches the new lower average total cost D) increase; economic profits are equal to zero
Which one of the following would benefit financially from unanticipated inflation?
A) a borrower whose loan has a fixed nominal interest rate B) a borrower with an adjustable rate mortgage C) a bank that has made loans at a fixed nominal interest rate D) a firm whose workers are covered by a COLA agreement
The purpose of the ceteris paribus assumption used in economic analysis is to:
A. Avoid making normative statements B. Distinguish macroeconomics from microeconomics C. Make sure that all relevant factors are considered D. Focus on the effect of a single factor on a certain variable
When per-unit output costs fall as output increases, this is called:
A. economies of scope. B. economies of scale. C. learning by doing. D. diminishing marginal returns.