Economies of scale will lead to only one firm in the industry because
A) by increasing output a firm is able to lower the cost per unit and charge lower prices driving smaller firms out of business.
B) one firm has an average cost curve, which has shifted below the average cost curves of its competitors.
C) there are governmental entry restrictions.
D) of government licensing.
Answer: A
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The ________ the desired reserve ratio, the ________ the ________ in the quantity of money created from an initial increase of $100,000 in the monetary base
A) smaller; larger; decrease B) larger; larger; decrease C) larger; smaller; decrease D) smaller; larger; increase E) larger; larger; increase
A sound policy to combat a temporary liquidity surplus in the banking system would be
A) a reduction in the discount rate. B) a decrease in the discount rate. C) the purchase of government securities by the Fed under a repurchase agreement. D) the sale of government securities by the Fed under a repurchase agreement.
Capital deepening shifts the output (or production function) curve upward to the right
Indicate whether the statement is true or false
When decisions are made by majority rule, elected officials have a strong incentive to
A) keep taxes low, run budget surpluses, and spend taxpayer funds wisely. B) protect individual rights and avoid favoritism of some individuals and voting blocs relative to others. C) take resources from taxpayers and use them to provide favors for various voting blocs in exchange for contributions and other forms of political support. D) serve the interest of consumers and taxpayers, and undertake only projects that are efficient.