Explain what a "perfectly contestable" market means. Give an example of a perfectly contestable market. Explain why the outcome in a perfectly contestable market is that firms produce efficiently
What will be an ideal response?
A perfectly contestable market is a market in which entry and exit are costless. An example of a perfectly contestable market is the market for trucking services. The firms are forced to behave efficiently because of the threat of competition.
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For most years since 1980, the natural unemployment rate was higher in Canada than in the United States. What possible explanation for some of this difference has been suggested?
What will be an ideal response?
Pauline is offered a Job in Minneapolis that pays $80,000 . She is offered a similar job in Louisville that pays $71,200 . Which pair of CPIs would ensure that the two salaries have the same purchasing power?
a. 90 in Minneapolis and 83 in Louisville b. 90 in Minneapolis and 72 in Louisville c. 100 in Minneapolis and 89 in Louisville d. 105 in Minneapolis and 90 in Louisville