Provide two examples of a government barrier to entry
What will be an ideal response?
1. A patent or copyright which gives an individual or a firm the exclusive right to produce a product for a given period of time, for example, a patents for pharmaceutical drugs such as the anti-depressant, Prozac, manufactured by Eli Lilly.
2. A public franchise which makes it the exclusive legal producer of a good or service, for example, PG&E is the sole provider of gas and electric utilities in Northern California.
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Answer the following statement(s) true (T) or false (F)
1. A firm that has not shut down in the short run will not shut down in response to a decrease in the marginal costs. 2. For prices greater than the minimum value of average variable cost, the firm's short-run supply curve coincides with its short-run marginal cost curve. 3. Given two supply curves passing through the same point, the flatter one has the higher elasticity. 4. Industry's supply curves tend to be less elastic than the supply curves of individual firms. 5. The elasticity of supply is positive because prices and quantities are always positive.
If the firms in an industry could take advantage of a reduced wage, how would one best describe the firms' demand for labor? The MRPL
A) schedule would remain unchanged, and the firms would hire more labor at the lower wage. B) schedule would shift to the left and the firms would move down the new schedule. C) schedule would shift to the right and the firms would move down the new schedule. D) none of the above
What is the rule for efficient output selection and how does the competitive market achieve it?
What will be an ideal response?
In order to increase productivity and economic growth, poor nations need
A. Increased consumption. B. A strong dictator. C. A large military. D. Increased capital investment.