If a market is contestable, how does the equilibrium differ from that of a monopoly?
What will be an ideal response?
A contestable market occurs when the firms in a market face potential entry from other firms due to low barriers to entry. While a monopoly free from the threat of entry will charge a high price and maximize economic profit, the firm or firms in a contestable market will keep price low and quantity produced high to deter potential entry by other firms outside the market. This benefits consumers, who enjoy near-competitive levels of output and a competitive market price.
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A corporation is considered a multinational ________ if ________
A) parent; it owns more than 10% of a foreign firm B) parent; more than 10% of its stock is held by a foreign company C) child; more than 10% of its stock is held by a foreign company D) child; more than 50% of its stock is held by a foreign company E) monopolist; it owns more than 50% of a foreign firm
As defined by economists, interest is
a. only the amount earned by productive capital as a resource b. only the amount earned by land as a resource c. only the amount earned by lending money d. both the amount earned by productive capital as a resource and the amount earned by lending money e. both the amount earned by land as a resource and the amount earned by lending money
The efficiency wage model is an explanation of wage __________ and thus a support for the ____________________ view
A) flexibility; Keynesian B) flexibility; classical C) inflexibility; Keynesian D) inflexibility; classical
A good economic model has
A) testable predictions. B) absence of assumptions. C) extreme simplifications. D) ambiguous predictions.