Which of the following is not an example of a government-imposed entry barrier?
A) patents
B) occupational licensing
C) barriers to international trade
D) antitrust legislation
Answer: D
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A firm engaging in rent seeking activity
A) is breaking the law. B) is willing to spend up to the gain in producer surplus. C) is irrational. D) increases societal gain.
A poll conducted by a national firm finds that most Americans say they care more about safety when buying a car than about fuel efficiency. As a result, a car maker produces a car with many safety features, but it doesn't sell well. This behavior
A) contradicts economic theory because the people didn't do what they said they would do. B) contradicts economic theory because it is irrational not to purchase safer cars. C) does not contradict economic theory because economists focus on what people do rather than on what they say. D) does not contradict economic theory because economic theory only relates to prices and not to features such as safety.
Studies of the effects of the minimum wage typically find that a 10 percent increase in the minimum wage depresses teenage employment by about
a. 1 to 3 percent. b. 5 to 7 percent. c. 10 percent. d. None of the above is correct because studies show no decrease in teenage employment.
When a tax is imposed on a good for which both demand and supply are very elastic,
a. sellers effectively pay the majority of the tax. b. buyers effectively pay the majority of the tax. c. the tax burden is equally divided between buyers and sellers. d. None of the above is correct; further information would be required to determine how the burden of the tax is distributed between buyers and sellers.