To an economist, the field of industrial organization answers which of the following questions?
A)Why are consumers subject to the law of demand?
B)Why do firms experience diminishing marginal productivities of their inputs?
C)How does the number of firms affect prices and the efficiency of market outcomes?
D)How can government intervention improve industrial production when externalities are present?

Question

Quizplus · Accepted Answer

Industrial organization is the study of how firms behave in markets and how market structure affects firm behavior. Therefore, it answers questions related to competition, pricing, and market efficiency, as well as the effects of government intervention on market outcomes. Option C specifically addresses how the number of firms in a market affects prices and efficiency, making it the most relevant choice. The other options are more focused on microeconomic principles, but not industrial organization specifically.

To an Economist, the Field of Industrial Organization Answers Which