Your best friend advocates the forced break-up of large firms, such as General Motors and Ford, on the grounds that they have a lot of monopoly power which they use to charge inefficiently high prices. According to Schumpeter, would breaking apart these gigantic firms guarantee consumers lower prices? Explain
According to the Schumpeter hypothesis, large firms typically enjoy enormous economies of scale, and so
their average total costs may be lower than if they were small. They will produce where their MC = MR
and that may result in a lower than competitive price.
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Which of the following is not related to adverse selection in insurance markets?
a. An insurance company has no way of distinguishing among applicants b. An insurance company must charge a higher price to applicants who are good health risks c. The price of insurance is attractive to poor health risks, but not to good ones d. The insured group becomes less healthy on average e. Because of the relative unhealthiness of the insured group, rates must rise
The more widely held and accepted credit cards are, the more money people would be expected to hold in the form of currency
a. True b. False Indicate whether the statement is true or false
Assume the desired reserve ratio is 10 percent, banks loan all excess reserves and the currency drain is zero. If the Fed sells $100 million of U.S. government securities to Boise Bank, the monetary base increases by
A) $1 million. B) $10 million. C) $100 million. D) $1,000 million. E) $90 million.
The agency most responsible for Japan's industrial policy:
a. MITI b. The central bank c. The finance ministry d. The prime minister e. The emperor