Market failure means that
A) the strike organized by unionized employees fails to achieve its goal.
B) too many outdated products are offered for sale in the local supermarket.
C) there is overallocation or underallocation of resources to certain economic activity.
D) an unexpectedly harsh winter shuts down a factory.
Answer: C
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Refer to Figure 15-4. What is likely to happen to this monopoly in the long run?
A) It will be regulated by the government because of its excess profits. B) New firms will enter the market to eliminate its profits. C) It will expand its output to take advantage of economies of scale so as to further increase its profit. D) As long as there are entry barriers, this firm will continue to enjoy economic profits.
Which of the following policy measures created an Office of Credit Ratings at the SEC with its own staff and the authority to fine credit-rating agencies and to deregister an agency if it produces bad ratings?
A) the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 B) Sarbanes-Oxley Act of 2002 C) Global Legal Settlement of 2002 D) Gramm-Leach-Bliley Act of 1999 E) Riegle-Neal Act of 1994
Suppose that vegetarian lobby groups run large advertising campaigns that are successful in substantially lowering the consumption of beef. As a result of the substantially lower desire for beef, we would expect
a. the price of beef to fall. b. the profitability of being a cattle rancher to fall. c. a reduction in the number and size of cattle herds--and thus the number of cows--in the long run. d. all of the above.
Price is constant or "given" to the individual firm selling in a purely competitive market because:
A. there are no good substitutes for the firm's product. B. the firm's demand curve is downward sloping. C. each seller supplies a negligible fraction of total supply. D. product differentiation is reinforced by extensive advertising.