In the long run, a representative firm in a monopolistic ally competitive industry will end up:
A. Having an elasticity of demand that will be less than it was in the short run
B. Having a larger number of competitors than it will in the short run
C. Producing a level of output at which marginal cost and price are equal
D. Earning a normal profit, but not an economic profit
D. Earning a normal profit, but not an economic profit
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The excess capacity theorem states that
A. society is worse off with fewer monopolistic competitors. B. costs of production under monopolistic competition can be lowered by reducing the number of producers. C. lack of excess capacity leads to shortages during periods of unexpected growth in demand for goods produced by monopolistic competition. D. there is too much choice in our economy.
The hidden-cost fallacy occurs when
a. A firm considers irrelevant costs b. A firm ignores relevant costs c. A firm considers overhead or depreciation costs to make short-run decisions d. Both a and c
If banks faced a 100 percent reserve requirement, the money multiplier would be: a. 0.1
b. 1.0. c. 10. d. 100.
Why is the money multiplier considered to be a potential multiplier rather than an indication of exactly how much multiplication should be expected?