All evidence points to the fact that firms' market power within an industry and industry concentration ratios are
a. directly related, that is, firms' market power is high when concentration ratios are high
b. inversely related, that is, firms' market power is low when concentration ratios are high
c. totally unrelated, that is, they are directly related in some industries and indirectly related in others
d. only moderately related, depending on the degree of competition in the industry
e. low for monopoly and high for perfect competition
A
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According to real business cycle theory, recessions are caused by
A. monetary factors affecting aggregate demand. B. a decline in the supply of money. C. changes in resource availability and technological innovation. D. people choosing leisure rather than work.
If concerns about mad-cow disease impose economic losses on the perfectly competitive cattle ranchers, exit by the ranchers combined with no further changes in the demand for beef will force the price of beef to
A) decrease. B) not change. C) increase. D) fluctuate, with the trend being lower prices. E) probably change, but more information about the market supply of beef is needed to answer the question.
If government imposes an excise tax on a good and the tax burden is borne equally by buyers and sellers, then
A) price elasticity of demand is unitary. B) price elasticity of supply is unitary. C) the absolute values of price elasticities of demand and supply are equal. D) None of the above
If a competitive firm's marginal cost curve is U-shaped then
A) its short run supply curve is U-shaped too B) its short run supply curve is the downward-sloping portion of the marginal cost curve C) its short run supply curve is the upward-sloping portion of the marginal cost curve D) its short run supply curve is the upward-sloping portion of the marginal cost curve that lies above the short run average variable cost curve E) its short run supply curve is the upward-sloping portion of the marginal cost curve that lies above the short run average total cost curve