Suppose that enforcement of antitrust laws resulted in any firm in this industry with market share above 20 percent to be split into two firms, with each having equal market share. That would cause this industry to
A) change from monopolistic competition to oligopoly.
B) change from oligopoly to monopolistic competition.
C) remain an oligopoly.
D) remain monopolistically competitive.
Answer: C) remain an oligopoly.
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Assume the government decides to impose a per-unit tax on a good produced in a perfectly competitive market
a. Graphically illustrate the short-run effects of the tax on the cost conditions faced by a representative firm in the market. b. Explain the adjustment process to long-run equilibrium in the market. What has happened to long-run equilibrium price and output as a result of the tax? What has happened to the number of firms in the market? Why?
According to the "beachhead effect," in order to undo the effects of a strong-dollar period, the real value of the dollar
A) must fall to at least half of its value before appreciation of the dollar began. B) must fall to the value it had before appreciation of the dollar began. C) must fall to a much lower level than it had before appreciation of the dollar began. D) must actually appreciate before it depreciates to undo the effects of a strong-dollar period.
If consumers spend _____ of a change in their disposable income, then a tax increase of $100 would lower consumption by $70
a. 35 percent b. 100 percent c. 80 percent d. 70 percent e. 50 percent
Are we running out of natural resources?
a. No, because we may abandon the use of a particular resource before we exhaust its supply. b. Yes, because some resources are nonrenewable. c. Yes, because all resources are eventually nonrenewable. d. Yes, because we live in a finite world. e. No, because all resources are in infinite supply.