In a contestable market,
A. A few firms collude to achieve monopoly profits.
B. Many firms compete, which drives prices down to minimum long-run average total cost.
C. Entry occurs when prices rise above average total costs.
D. A few firms use predatory prices to achieve market share.
Answer: C
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In the classical model, what occurs if a wage of $20/hour results in unemployed workers?
A) The wage rate will drop, more workers will be hired, and the unemployment rate falls. B) Producers will quickly create more jobs and hire the unemployed workers, so unemployment is short-lived. C) The workers will go on strike to demand that more jobs be created. D) The government will step in and order firms to hire more workers.
Is GDP an accurate measure of a country's well being?
a. Yes, it is the best measure of national well being. b. Yes, provided we use real GDP and not nominal GDP. c. The answer is uncertain, depending on whether GDP is rising or falling. d. No, it is not.