Author Question: Which of the following is a distinguishing characteristic of oligopoly? A) A large number of ... (Read 55 times)

LaDunn · **on:** Jun 29, 2018

Which of the following is a distinguishing characteristic of oligopoly?

A) A large number of firms compete.
B) Each firm's actions influence the profits of all the other firms.
C) Firms are free to enter and exit the industry.
D) Natural barriers cannot prevent the entry of new firms.

Question 2

Discuss reasons why we see trade restrictions. Are any of these reasons valid?

What will be an ideal response?

efwsefaw · **Reply #1 on:** Jun 29, 2018

Answer to Question 1

B

Answer to Question 2

There are several reasons advanced to restrict trade. These include: the infant-industry argument (that the nation should protect a young industry that will reap learning-by-doing gains in productivity and eventually be able to compete successfully in the world market); dumping (the nation should protect an industry from foreign competitors who sell goods below cost); protection saves jobs (the claim that imports cost U.S. jobs); cheap foreign labor (the assertion that tariffs are necessary to compete with cheap foreign labor); lax environmental standards (the claim that protection is needed to compete against nations with weak environmental standards); and, rich nations exploit developing countries (the suggestion that protection prevents developed nations from forcing people in poor nations to work for slave wages). Economists reject all of these claims as valid reasons for protection.