Some economists believe that the economy benefits from firms having market power. Which of the following is an argument that has been made to support this position?
A) Large firms are better able than small firms to spend funds on research and development required to develop new products.
B) Research has shown that the deadweight loss from monopolies is a small percentage of the value of production in the United States.
C) Competition is very rare in the U.S. economy and few new products are produced by smaller, competitive firms.
D) Large firms can afford to lobby the U.S. government in order to impose restrictions on imports and reduce the outsourcing of jobs to other countries.
A
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Commercial banks are able to create money by
A) printing Federal Reserve Notes. B) making loans. C) making customers pay back their loans. D) exchanging their reserves at the Fed for currency.
Which of the following describes a situation in which the person is hurt by inflation?
A) a person who lends money during a period when inflation is over-predicted B) a person who borrows money during a period when inflation is under-predicted C) a person paid a fixed income during an inflationary period D) a retiree whose pension is adjusted for inflation
In the liquidity trap, the money demand curve
A) is horizontal. B) is vertical. C) is negatively sloped. D) is positively sloped.
If an economy is operating __________ its institutional production possibilities frontier, it is producing __________ output than it would be at full employment
A) below; less B) below; more C) above; less D) above; more E) a and d