According to the text, one argument in favor of concentration of market power is that
A. Market power results in higher prices and lower quantities.
B. Large firms can sometimes produce more efficiently than small firms because of economies of scale in production.
C. The exercise of market power provides a more desirable mix of output.
D. Market power always increases incentives for innovation and invention.
Answer: B
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Society definitely benefits by reducing the number of monopolistically competitive firms.
Answer the following statement true (T) or false (F)
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Indicate whether the statement is true or false
Which of the following goods (with their respective income elasticity coefficients in parentheses) will most likely suffer a decline in demand during a recession?
A. Dinner at a nice restaurant (+1.8) B. Chicken purchased at the grocery store for preparation at home (+0.25) C. Facial tissue (+0.6) D. Plasma screen and LCD TVs (+4.2)
International capital inflows reduce the power of fiscal policy.
Answer the following statement true (T) or false (F)