Explain True/False. If false make the correct answer:
a. A market with barriers to entry may not be characterized by production at the minimum ecient scale in the long run. (True/False)
b. Mr. Cherry has a cost function of c(x) = x^2 + 100 if his output is x, is positive, but c(x) = 0 when x is 0. If the price of output is lower than 20, and Mr. Cherry is a competitive pro t-maximizer, he will produce zero output. (True/False)
c. The Diamond-Mortensen-Pissarides model successfully explains the phenomenon of unemployment, while competitive market models ( earlier models in our class) cannot. (True/False)
d. The existence of workers union increases the wage bargaining power of workers. The impact of union on equilibrium wage in Dimond-Mortensen-Pissarides model must be positive. (Hint: Think about the impact of union on market tightness) (True/False)
e. If a country switches from a non-golden rule saving rate to the golden rule saving rate, consumption per capita shall increase immediately. (True/False)
f. In the Solow growth model, two countries with the same production function, same saving rate, capital deprecation rate and population growth should have the same level of capital per capita. (True/False)
g. In the Malthusian model, policies that aim to control population growth will not increase consumption per capita in the long run. (True/False)
h. The failure of economic convergence in data may be explained by factors that influence total factor productivity z, according to the endogenous growth theory. (True/Fasle)