The price of diamonds is high, in part because the majority of the world's diamonds are controlled by a single firm. This is an example of
a. a market failure caused by an externality.
b. a market failure caused by market power.
c. a market failure caused by equality.
d. There is no market failure in this case.
b
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Jodie has indifference curves for CDs and colas, with CDs on the vertical axis. The flatter her indifference curves are, the
A) smaller her average rate of substitution. B) larger her average rate of substitution. C) smaller her marginal rate of substitution. D) larger her marginal rate of substitution.
An economist at the University of Alaska at Anchorage has been asked to explain why the price of Alaskan crude oil has fallen recently. In order to develop a model, the professor should take which steps?
a. Identify the problem, develop a model based on simplifying assumptions and test the model to formulate a conclusion. b. Gather data on crude oil prices and seemingly unrelated variables in order to look for associations, then formulate a hypothesis based on those unexpected associations. c. Ask people in Alaska why they are not purchasing oil. d. None of these. The oil industry is controlled by a cartel; therefore price changes in the industry cannot be explained using economic theories.
Which of the following is an example of public ownership of a monopoly?
a. DeBeers b. Microsoft c. U.S. Postal Service d. AT&T
”One of the failings of a market system is the damage to the environment. Pollution would not exist with a centrally planned economy.” Evaluate this statement.
What will be an ideal response?