In what ways is government involved with the creation of barriers to entry?
What will be an ideal response?
The government often erects barriers to entry by requiring licenses and franchises before firms can legally operate in a market, by granting patents, by assessing tariffs, or by implementing specific regulations that limit entry. It is illegal to enter many industries without a government license, and often the number of such licenses is limited. Patents create a legal monopoly for a period of 20 years, and tariffs help to keep out competition from foreign firms.
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A person's consumption possibilities is defined by the budget line because
A) it marks the boundary between what is affordable and unaffordable. B) it represents the individual's preference for different combinations of goods. C) it marks the boundary between what can be produced and what is unattainable given the current state of technology and resources. D) all consumers must consume on their budget line.
The financial crisis occurred in 2008 in large part because of losses on securities consisting of bundles of mortgage loans known as
A) home loan loss reserves. B) credit default swaps. C) mortgage-backed securities. D) naked put options.
Which of the following types of employment is inevitable whenever an employee loses his or her job?
a. cyclical b. frictional c. seasonal d. structural
In the classical range of the aggregate supply curve, greater spending for consumer and investment goods results in:
A. stagflation. B. more unemployment. C. greater output. D. a higher price level.