“Monopoly has developed in both product and resource markets because of the shortcomings and inefficiencies of competitive markets.” Do you agree? Explain
What will be an ideal response?
This is true in the case of “natural monopolies” where economies of scale lead to the most efficient size firm being one that monopolizes the market. More and smaller firms would be inefficient in such cases.
Monopolies have also developed as a result of patent law protection, but in this case the shortcomings or inefficiencies of the competitive market cannot be blamed, but rather the monopoly is a result of government policy.
Finally, monopoly power has developed in industries where market forces no longer provided adequate control to ensure socially tolerable behavior. In these cases the statement would be true.
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A Nash equilibrium occurs
A) when each player acts without considering the actions of the other player. B) when each player takes the best possible action given the action of the other player. C) only when players use the tit-for-tat strategy. D) only when the game is played in Nashville, Tennessee. E) when each player takes the action that makes the combined payoff for all players as large as possible.
In the short-run macro model, what is the relationship between income and government purchases?
a. It is positive and stable. b. It is positive but unstable. c. It is negative and stable. d. It is negative but unstable. e. There is no relationship between the two variables.