Evaluate the statement: “A market that produces an identical product cannot be become an oligopoly.”
What will be an ideal response?
This statement is incorrect. A number of factors can lead to the creation of an oligopoly, even though the products produced by the firms are identical. For example, if there are large fixed costs that are involved in the production of the product or large economies of scale necessary to achieve profits (like in the steel and aircraft industries), then only a small number of firms may be able to produce and achieve sufficient sales. Also, mergers of firms in the industry by companies seeking to increase their market share and thus increase their profits may result in the existence of only a small number of firms in the market.
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An increase in the income tax rate leads to a large increase in deadweight loss if ________
A) the labor supply curve is highly elastic B) the labor supply curve is perfectly inelastic C) the labor demand curve is elastic D) the labor demand curve is perfectly inelastic
How would you characterize the main difference between causes of death in developing and developed countries? What are the implications for how to reduce the death rate?
What will be an ideal response?
If France limits the showing of U.S. produced television shows to 2 hours per day,
A. this is the same as a tariff. B. this is the same as a quota. C. economists would not call this a limit on trade, since it is a service. D. this make U.S. producers of television wealthier than they would otherwise be.
Related to the Economics in Practice on p. 105: Researchers found that after a few years of a tax relief policy for foreigners, the fraction of foreigners in the top 0.5 percent of income earners in Denmark almost doubled. The researchers concluded that for this group of workers, labor supply seems to be
A. elastic. B. perfectly inelastic C. inelastic. D. unit elastic.