Arnold Harberger was the first economist to estimate the loss of economic efficiency due to market power. Harberger found that
A) the loss of economic efficiency in the U.S. economy due to market power was small around 1973, about 1 percent of the value of production, but has since grown to about 10 percent.
B) because of the increase in the average size of firms since World War II, the loss of economic efficiency has been relatively large, about 10 percent of the value of total production in the United States.
C) the loss of economic efficiency in the U.S. economy due to market power was less than 1 percent of the value of production.
D) although the number of monopolies was small, the large number of other non-competitive firms in the United States resulted in a large loss of economic efficiency, about 20 percent of the value of total production.
C
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The figure above shows the costs and demand curves for the Bigshow Cable Company. If the regulator wants to set the price so that Bigshow earns the same normal profit as a perfectly competitive firm, what price should be set?
A) $8 B) $6 C) $4 D) $2
Banks have responded to new regulations resulting from the Dodd-Frank Act in all of the following ways EXCEPT:
A) raising minimum balances on free checking accounts B) closing branches in low-income neighborhoods C) raising overdraft fees D) increased marketing of securities and financial advice to high-income customers