What are the pros and cons of a competitive market in the long run?
What will be an ideal response?
The pros include price equals minimum average total costs and marginal cost. Also, only a normal profit is earned in the long run. The major drawback of a competitive market is that it usually does not promote technological advances (because competitive firms do not earn the profits necessary to enable long-term investments in research and development).
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In a competitive market without intervention, pure public goods would be
A. produced but at inefficiently high quantities. B. produced but at inefficiently low quantities. C. freely available. D. not produced.
An economist looks at data that suggests that people are making decisions that are based on rules of thumb. She concludes that people tend to make decisions that are based on habit and not on the economic decision rule. She is most likely a(n):
A. behavioral economist. B. irrational economist. C. traditional economist. D. engineering economist.