Which of the following conditions ensures that excess profits cannot persist in a perfectly competitive market over the long run?
A) Large number of firms in the industry.
B) Outputs of the firms are perfect substitutes for one another.
C) Complete information is available to all market participants.
D) Ease of entry into the market.
D
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Which of the following does not describe a characteristic of short-term economic fluctuations?
A. Expansions and recessions are felt in only a few sectors of the economy. B. The unemployment rate rises during recessions. C. Durable-goods industries are more sensitive to short-term fluctuations than service and non-durable industries. D. Expansions and recessions are irregular in length and severity.
Refer to the scenario above. If the cost of advertising is negligible, what will the outcome of this game be?
A) Company A will advertise its products while Company B will not advertise. B) Company B will advertise while Company A will not advertise. C) Both the companies will advertise their products. D) Neither of the companies will advertise its products.
If three cell phone providers are in an agreement, this is an example of a ________ agreement.
A) vertical B) leftward C) horizontal D) rightward
Which of the following is NOT a likely market solution to the lemons problem?
A) average cost pricing B) product warranty C) industry standard D) product certification