According to the text, a convincing argument against concentration of market power is that
A. The exercise of market power results in a higher price.
B. Market power increases incentives for innovation and invention.
C. Market power results in lower barriers to entry.
D. Large firms can produce more efficiently than small firms because of diminishing returns in production.
Answer: A
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Corporate profits are
A) taxed at too low a rate. B) taxed only when a stockholder sells his or her shares of stock. C) taxed twice—once by the corporate tax system, and again by personal tax system when they are paid to stockholders as dividends. D) taxed three times—once by the corporate tax system, again by the personal tax system, and again as capital gains.
Refer to Figure 35.3 for the production possibilities curves for the United States and Mexico. These two curves indicate that
A. Mexico has a comparative advantage in the production of tomatoes. B. The United States has a comparative advantage in the production of machinery. C. There is no benefit to the United States as a result of trading tomatoes or machinery with Mexico. D. Mexico does not have an absolute advantage in the production of either good.