An industry comprised of a very large number of sellers producing a standardized product is known as:
A. monopolistic competition.
B. oligopoly.
C. pure monopoly.
D. pure competition.
Answer: D
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Because banks engage in regulatory arbitrage, the Basel Accord on risk-based capital requirements may result in
A) reduced risk taking by banks. B) reduced supervision of banks by regulators. C) increased fraudulent behavior by banks. D) increased risk taking by banks.
If the Fed decides to keep interest rates low when there is a large budget deficit, economists conclude that the Fed is
A. monetizing the debt. B. neutralizing the effects of the deficit. C. correcting the deficit for inflation. D. resisting the effects of the deficit.
If a society only cares about efficiency and not equity, then
A) all points on the contract curve yield the same level of social welfare. B) it will not rely on competitive markets to allocate goods. C) it will maximize the utility of its worst-off member. D) an equitable outcome is impossible.
Answer the following statements true (T) or false (F)
1) An increase in taxes will shift both the consumption schedule and the saving schedule down. 2) The Great Recession of 2007-2009 caused a basic change in consumer behavior, shifting the saving schedule up. 3) If the real rate of interest increases, then the level of investment in the economy will also increase. 4) A business firm will purchase additional capital goods if the real rate of interest in the economy is less than the expected rate of return from the investment. 5) An increase in business taxes will tend to shift the investment-demand curve rightward.