From the viewpoint of economic efficiency, when competitive forces in an industry are weak, market allocation will often lead to
a. an output of the product that exceeds the amount consistent with ideal economic efficiency.
b. an output of the product that is less than the amount consistent with ideal economic efficiency.
c. an output of the product that equals the amount consistent with ideal economic efficiency.
d. product prices that are below the cost of production.
B
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In equilibrium, if both uncovered and covered interest parity hold, what condition should exist?
a. World interest rates will be equal. b. Rates of inflation will equalize. c. The forward rate will equal the expected future spot rate. d. The forward rate will decrease as the spot rate rises.
The unemployment rate is an important economic statistic that can tell us about the health of the economy. If the unemployment rate turns out to be high or higher than anticipated, we would expect
A) that jobs are less difficult to find. B) that investors will be more optimistic about the economy. C) that stock prices are more likely to fall. D) it is more likely that an incumbent president will be re-elected.