In a competitive market economy, a resource in short supply will be allocated
A. so that each firm gets enough to keep producing some portion of its output.
B. according to how much each firm purchased before the shortage.
C. to those firms that can make the most profitable use of it.
D. by government fiat.
Answer: C
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A strategy called "limit pricing" sets the price
A) below the competitive level. B) at the monopoly level. C) at the lowest level that inflicts a loss on the entrant. D) at the highest level that inflicts a loss on the entrant.
When firms have the ability to restrict output, raise prices, stifle competition, and inhibit innovation, the market failure involved is
A. Public goods. B. Inequities. C. Externalities. D. Market power.
Which of the following is not a tool of monetary policy?
A. Open-market operations. B. Changes in banking laws. C. Changes in the rate of interest paid on reserves held at Federal Reserve Banks. D. Changes in the reserve ratio.
An important consequence of financial deepening is ________
A) an increase in the number of new firms B) a sharp increase in levels of saving & investment C) higher profit rates D) an expansion of bank loans relative to other funding sources