How Does Contestable Markets Theory Challenge Orthodox Market Structure Theory

question 142

Multiple Choice

How does contestable markets theory challenge orthodox market structure theory?

• A)Contestable markets theory argues that firms do not maximize sales; orthodox market structure theory argues that they do.
• B)Orthodox market structure theory places much greater weight than contestable markets theory on the number of firms in an industry as a major factor in determining a firm's behavior.
• C)Contestable markets theory emphasizes product differentiation; orthodox market structure theory does not.
• D)Contestable markets theory emphasizes nonprice competition; orthodox market structure theory does not.

Interpret the effects of transitory vs. permanent income on household spending decisions.

Analyze various perspectives and proposals for income redistribution, including negative income taxes and the Earned Income Tax Credit.

Evaluate the impact of government intervention on income inequality and the economy's resource allocation.

Understand libertarian views on equal opportunities versus equal outcomes and their policy implications.

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Definitions:

Walter Mischel

A psychologist known for his research on personality and cognitive and social-cognitive processes.

Personality on Behavior

The influence that an individual's characteristic patterns of thoughts, feelings, and behaviors have on their actions and reactions.

Situational Constraints

External factors that restrict or dictate an individual's actions in a given situation, limiting the options available.

Stable Personality Traits

Personality characteristics that are consistent over time and across situations.