Of the following, the best example of firm that might operate in a contestable market is a
A) cable TV company.
B) wheat farmer.
C) ship owner operating on a major waterway.
D) private college operating in a state with many public colleges.
C
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The Lerner Index is
A) the ratio of the difference between price and marginal cost to price. B) equal to (Price - MC)/Price C) a measure of market power. D) All of the above.
Monopolistic competition is characterized by
A. one firm selling several products. B. many firms selling the same product. C. many firms selling slightly different products. D. one firm selling one product.
Prolonged periods of monetary contraction, as was the case during the Great Depression, will likely result in
a. an increase in real output and employment. b. an increase in loanable funds and upward pressure on the rate of inflation. c. a decrease in output and downward pressure on prices. d. a decrease in unemployment and upward pressure on prices.
To achieve long-run equilibrium in an economy with a recessionary gap, without the use of stabilization policy, the inflation rate must:
A. not change. B. increase. C. decrease. D. either increase or decrease depending on the relative shifts of AD and AS.