Suppose an industry has a four-firm concentration ratio of 20 percent and a Herfindahl index of 600. According to the cartel model, the industry would be more likely to have:
A. a price war.
B. a monopolistic price.
C. either a monopolistic or a competitive price, depending on barriers to entry and exit.
D. a competitive price.
Answer: D
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The U.S. government provides monthly payments to retired workers under which program?
A) the Old Age, Survivors, Disability and Health Insurance (OASDHI) B) the Temporary Assistance for Needy Households (TANF) C) the Supplementary Security Income (SSI) D) a series of income tax rebates
One reason patent protection is vitally important to pharmaceutical firms is
A) successful new drugs are not profitable. If firms are not granted patents many would go out of business and health care would be severely diminished. B) the approval process for new drugs through the Food and Drug Administration can take more than 10 years and is very costly. Patents enable firms to recover costs incurred during this process. C) the high salaries pharmaceutical firms pay to scientists and doctors make their labor costs higher than for any other business. Profits from patents are needed to pay these labor costs. D) that taxes on profits from drugs are very high; profits from patent protection enable firms to pay these taxes.
Which of the following statements is true about the U.S. economy?
A) Each year, many new jobs are created, but few existing jobs are destroyed, and the unemployed find jobs quickly. B) Each year, few new jobs are created, but few existing jobs are destroyed, keeping unemployment low. C) Each year, many new jobs are created and many existing jobs are destroyed. D) Each year few jobs are created, and therefore it takes the unemployed a long time to find a new job.
If the MPM is 0.4, then a $2,000 increase in income will
A. increase imports by $800. B. increase exports by $5,000. C. increase imports by $5,000. D. increase exports by $800.