What is ‘government failure'? How would you draw the line between public and private activity?
What will be an ideal response?
Government failure is defined in the text. Students should address issues of efficiency and externalities, at least in drawing their line. Other concerns, such as fairness, may also be addressed, although students should be encouraged to distinguish between purely economic and other criteria.
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Discuss reasons why we see trade restrictions. Are any of these reasons valid?
What will be an ideal response?
Which of the following is not an example of a commercial bank's liabilities?
a. Checking account deposits. b. Any type of demand deposit. c. Loans. d. a and b. e. None of the above.
A firm that experiences economies of scale has a ______ average cost curve.
A. positively-sloped B. negatively-sloped C. U-shaped D. flat
Which statement concerning the kinked demand curve model of oligopoly is false?
A. It addresses the question of price "stickiness." B. It assumes when one oligopoly raises the price, all others will follow. C. The portion of the demand curve above the "kink" is more elastic than the portion below. D. The firm's marginal costs can sometimes shift without changing the profit-maximizing price and output.