One way the government can introduce competition into a monopoly industry is to:
A. split it vertically.
B. break up the company along different stages of the production process.
C. split it horizontally.
D. All of these statements are true.
Answer: D
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Over the past year, output grew 5%, capital grew 5%, and labor grew 1%. If the elasticities of output with respect to capital and labor are 0.3 and 0.7, respectively, how much did productivity grow?
A) 0.5% B) 1.0% C) 2.2% D) 2.8%
Which of the following will be a short run impact of a pre-election expansionary fiscal policy, public expectations remaining constant?
a. An increase in unemployment b. A decline in real GDP c. An increase in real GDP d. A fall in the rate of inflation e. An economic recession
A new U.S. tariff on imported steel would be likely to: a. raise the cost of production to steel-using American firms. b. generate tax revenue to the government
c. increase U.S. production of steel. d. all of the above
An advantage of automatic stabilizers is that this type of fiscal policy
A. requires precise knowledge of full-employment real GDP. B. can be influenced by special interest groups when their concerns are valid. C. is not subject to lag time problems. D. accelerates the direction in which the economy is moving at the time.