Question

1.

Achieving economic efficiency requires markets to be properly structured. Which of the following is NOT part of the ideal market structure?

		a lack of competition between firms
		consumers have access to good information about all products
		business have good information about their customers
		prices accurately reflect a product's value

2.

Short-run fluctuations are temporary movements of output

		away from the long-run trend of output
		that are sometimes called business cycle movements
		that are called recessions when output declines below trend
		all of the above

Answer 1

1. Option A. Lack of competition between firm's.

• Economic efficiency can be achieved if the market's are structured well and function efficiently.
• For market's to function effectively, the consumer's and firm's must have enough information about each other and communicate well with each other.
• Lack of competition between firm's is NOT part of ideal market structure.

2. Option D. All of the above.

• Short run fluctuations are temporary movements of output away from the long run trend of output.
• These short run fluctuations are also known as business cycle fluctuations.
• But when the output falls below a certain value, these short run fluctuations is known as recession.