You are the mayor of your home town, and one day you arrive at city hall to find angry voters demonstrating against you. They are mad because your office created a garbage-collection monopoly by awarding only one company a permit to collect garbage in
your town. The voters claim that the company is overcharging and providing poor service. They want you to do something that will lower rates and improve service. You call your staff economist, who presents evidence that there are substantial economies of scale to garbage collection. What are your options if you are interested in efficiency?
Since there are substantial economies of scale, you would not want to allow more companies to enter and you would not want to split up the existing company. You can either regulate the monopoly, or put the city in charge of garbage collection (either by buying out the monopoly, or by revoking its permit and taking over garbage collection).
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What happens to the demand curves of the existing firms when new firms enter into a monopolistic competitive market?
What will be an ideal response?
For main industrial countries such as Japan and the U.S
A) there is much less month-to-month variability of the exchange rate, suggesting that price levels are relatively sticky in the short run. B) there is much more month-to-month variability of the exchange rate, suggesting that price levels are relatively sticky in the short run. C) there is almost the same month-to-month variability of the exchange rate and price levels. D) it is hard to tell whether month-to-month variability of the exchange rate is similar to changes in price levels. E) there is much more month-to-month variability of the exchange rate, suggesting that price levels are relatively sticky in the long run.
________ examines whether one variable affects another by using data to build a model that explains the channels through which this variable affects the other
A) Indirect-model evidence B) Organizational-model evidence C) Reduced-form evidence D) Structural-model evidence
Which of these economic variables is countercyclical?
A) investment spending B) unemployment C) demand for foreign products D) all of the above E) none of the above