Incumbents are unaffected by fixed costs of entry while potential entrants are affected by them because
A) for potential entrants the cost is avoidable, while for the incumbent, it is not.
B) fixed costs will be greater for the potential entrant than for the incumbent.
C) fixed costs are zero for the incumbent.
D) incumbents will act to prevent entry at all costs.
A
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If the real wage rate is such that the quantity of labor supplied by workers is less than the quantity of labor demanded by firms
A) the economy is at full employment. B) there is a shortage of labor. C) the real wage rate will fall to restore equilibrium. D) actual real GDP equals potential GDP because firms make the decision about how many workers to hire.
Suppose that during the last five years the rate of inflation was 3 percent each year and the money supply had grown 6 percent annually during the period. However, during the last nine months, the Fed has expanded bank reserves more rapidly and the money supply has been growing at a 12 percent annual rate. As a result, the expected inflation rate for the next period will be
a. higher than 3 percent under the rational expectations hypothesis. b. 3 percent under the adaptive expectations hypothesis. c. higher than 3 percent under both the adaptive and rational expectations hypotheses. d. both a and b.
Other things the same, an economy's factors of production are likely to be used more effectively if there is an economywide respect for property rights
a. True b. False Indicate whether the statement is true or false
If the population of a country is 1,000,000 people, its labor force consists of 500,000, and 40,000 people are unemployed, the unemployment rate is:
a) 8.0 percent. b) 7.4 percent. c) 50.0 percent. d) 4.0 percent.