In the presence of no externalities,
A) social marginal cost exceeds private marginal cost.
B) social marginal cost is less than private marginal cost.
C) social marginal cost equals private marginal cost.
D) social marginal cost and private marginal cost cannot be compared.
C
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Starting from potential output, if firms become more optimistic about the future and decide to increase their investment in new capital, then this will generate a(n) ________ gap and inflation will ________.
A. expansionary; decrease B. recessionary; decrease C. expansionary; increase D. recessionary; increase
Which of the following is most subject to the lemons problem?
A) credence goods B) homogeneous goods C) search goods D) inferior goods
Identify four reasons for high entry barriers. Briefly explain each reason
What will be an ideal response?
Firms that exhibit price-taking behavior
A) wait for other firms to set price, take it as given, and charge a higher price. B) have outputs that are too small to influence market price and thus take it as given. C) take pricing behavior in their own hands. D) are independently capable of setting price.