Answer the following questions true (T) or false (F)
1. The four-firm concentration ratio of the aircraft industry is over 80 percent. Most economists would consider this industry an oligopoly.
2. According to the textbook, the most important barrier to entry is economies of scale.
3. Because of the flaws of the concentration ratio as a measure of the extent of competition in an industry, some economists prefer another measure of competition, the Herfindahl-Hirschman Index.
1. TRUE
2. TRUE
3. TRUE
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Consider the following information for a family. The income for the family is $58,000; if the MPS is 0.25, and the income for the family decreases by $15,000, then the decrease in consumption will be:
a. $3,750. b. $10,500. c. $11,250. d. $1,500.
The perfectly competitive model is most likely to apply to a labor market in which
a. many well-informed firms must negotiate with one dominant labor union b. there are a few firms, and they are uninformed about the attributes of each worker c. there are many workers currently in the market who must negotiate with one dominant firm d. there are many well-informed workers and firms, and each worker appears the same to firms e. one dominant labor union must negotiate with one dominant firm