To own a taxicab in New York City, you must own a medallion. New York City regulates the number of official cabs by limiting the number of medallions. Explain why the New York cab industry is not competitive by reviewing the four conditions necessary for competition. NYC violates which one?
What will be an ideal response?
The characteristics of perfect competition are many firms, identical products, no barriers to entry or exit, and perfect information for buyers and sellers. The medallion is a barrier to entry to new firms, which can only enter the industry by buying a medallion from existing taxicab owners.
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In the figure above, if there is no Ricardo-Barro effect, the government has a ________ because ________
A) budget deficit; there is no Ricardo-Barro effect. B) balanced budget; there is no Ricardo-Barro effect. C) budget surplus; the SLF curve lies to the right of the PSLF curve. D) budget surplus; there is no Ricardo-Barro effect. E) budget deficit; the SLF curve lies to the right of the PSLF curve.
In monopolistic competition, in the short run a firm maximizes its profit by selecting an output at which marginal cost equals
A) average total cost. B) marginal revenue. C) price. D) zero.
What factors increase potential GDP? Include a definition of potential GDP in your answer
What will be an ideal response?
Adverse selection occurs when those ________ likely to get ________ insurance payoffs are the ones who want to purchase insurance the most
A) least; large B) least; small C) most; large D) most; small