"If firms in an oligopoly operate as a monopoly, the industry produces the most output and if they operate as perfect competitors, the industry produces the least output." Is the previous statement correct or incorrect? Why?
What will be an ideal response?
The statement is incorrect; it reverses the outcomes. If the firms in an oligopoly operate as a monopoly, the industry produces the least output and if they operate as perfect competitors, the industry produces the most output.
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The manner in which FDIC deposit insurance is set up in the United States encourages banks to
A) make riskier loans than they otherwise would. B) reject some loans that probably would be profitable. C) be too conservative in their lending practices. D) maintain excess reserves that are too great.
Education confers positive externalities because
a. some education is done outside the market (i.e., in public schools) b. curricula are regulated by the government, even in private schools c. an educated person consuming education gains many benefits he or she did not expect when the process started d. an educated person who has consumed education usually behaves in a way that benefits others e. education gives benefits to individuals in excess of the costs they pay to get it
Suppose that firms in the chemical industry are allowed, free of charge, to dump harmful products into rivers. If this is the case in a competitive market, how will the price and output of the chemical products compare with their values under conditions of ideal economic efficiency?
a. Price is too low; output is too large. b. Price is too high; output is too large. c. Price is too low; output is too small. d. Price is too high; output is too small.
Which of the following is a statement which describes how the world should be?
a. Positive statement b. Normative statement c. Cognitive statement d. Reflective statement