If the free market is called upon to provide public goods, then:
a. there will more goods provided than is optimal.
b. there will be fewer goods provided than is optimal.
c. the market will provide the optimal number of goods.
d. the market price will be correct, but the optimal amount of output will not be produced.
e. the firms will earn excess profit.
b
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Less developed countries are often characterized by imperfect capital markets. Assuming that the LCH applies to these countries and that a large proportion of the population is below fifty the
A) MPC should be relatively high. B) MPC should be relatively low. C) frequency of liquidity constraints is low. D) sensitivity of consumption to loans is low.
The formal game theory model assumes that:
A. the dominant firm in the industry will set product price and other firms will follow. B. each player tries to anticipate the reaction of his or her rivals when making a decision. C. each player ignores the possible reaction of his or her rivals when making a decision. D. markets are contestable when no barriers to entry exist.