Describe the general types of barriers
What will be an ideal response?
Barriers to entry can be divided into legal barriers and natural barriers. Legal barriers occur when government action blocks competition in a market. For instance, the government could grant a public franchise, government license, patent, or copyright. In all cases, the government action prevents other firms from entering the market. Alternatively, a firm might buy up a significant portion of a natural resource. For instance, DeBeers controls over 80 percent of the world's diamond market. The other type of barrier to entry is a natural barrier. A natural barrier to entry occurs when economies of scale are so large that they make it possible for one firm to meet the entire market demand at a lower price than could two or more firms. In this case, the market will "naturally" evolve to become a monopoly as a larger firm uses its cost advantage to cut its price and drive its high-cost, smaller competitors out of business.
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A tax credit
A. is not the same as a tax deduction. B. is another phrase for a tax deduction. C. is never calculated on federal tax returns. D. only applies to the EITC.
Which of the following is true about inflation? a. Inflation promotes social harmony by uniting people against the government
b. Inflation is more damaging if it is unanticipated. c. Accurate anticipation of inflation is possible for everyone who is well informed about economic events. d. Those who lend money at a rate above the rate of inflation suffer economic losses. e. If people accurately anticipate inflation, their actions will prevent it.
Upward mobility for those in poverty is
A. Not likely to happen at all because most people live in a caste system. B. More likely for people in rich nations than in poor nations. C. Equally likely for people in rich nations and poor nations. D. More likely for people in poor nations than in rich nations.
Which of the following offers the best explanation of why "marginal revenue equals marginal cost" is the rule that indicates the profit-maximizing output level?
A. If output were reduced from the profit-maximizing level, then the firm would be gaining marginal revenue that exceeds marginal cost, and thus increasing the level of profit. B. If output were increased from the profit-maximizing level, then the firm would be gaining marginal revenue that is less than the marginal cost incurred in producing this additional unit, and thus reducing the level of profit. C. Because the firm colludes with other similar firms to set price equal to marginal cost. D. The marginal revenue is equal to the marginal cost at all levels of output for a perfectly competitive firm.