Question

QUESTION 13 You read the Electricity City Utility Company has problems. Its headquarters had an expansive retaining wall collapse during a flood last week. This led to toxic coal ash flows that buried homes and even caused a few fatalities. An editorial claims that the company will not be held accountable to the same standards as the asbestos companies that paid severe fines and even went out of business due to their lack of attention to environmental clean-up. You agree with the writer because you recently studied about the various competitive markets and utility companies clearly fall under monopolistic competition O True O False QUESTION 14 A monopoly occurs when there is a single seller for a product or service. O True O False QUESTION 15 A free-market economic system is one in which the market of buyers and sellers decides what is produced, how much is produced and how it is distributed O True O False QUESTION 16

Answer 1

13) FALSE .

The utility company is a monopoly and electricity is a necessary good . The asbestos are in a competitive market where numerous firms produce homogeneous output . So they have close substitutes . But here there is no close substitute producing firm .

14) TRUE .

A monopoly occurs when a firm is the only firm in an industry producing the product, so that the monopoly faces no competition .

15) TRUE .

In a free market the laws and forces of supply and demand are free from any intervention by a government, or by other authority and such forces drive the market .

16) TRUE .

Stagflation is a condition when there is slow economic growth and relatively high unemployment, accompanied by rising prices, or inflation . It can also be defined as inflation and a decline in gross domestic product (GDP) .