In a monopolistically competitive industry, the competitive element results from ____ and the monopoly element results from ____.
a. product differentiation; substantial barriers to entry
b. a large number of firms and free entry; product differentiation.
c. advertising; product differentiation.
d. product differentiation; the small number of large producers.
b
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Which of the following is least likely to issue commercial paper?
A) General Motors Acceptance Corporation B) A large bank holding company C) General Electric D) The U.S. Treasury
Government spending equals the sum of _____, _____, and _____
a. taxes; changes in the reserves of the central bank; changes in net exports b. taxes; change in government debt; change in government-issued money c. taxes; public expenditures; private deductible expenditures d. public expenditures; business investment; change in government debt e. public debt; welfare expenditures; social security expenditures
If firms in a monopolistically competitive market are incurring economic losses, which of the following statements describes the changes that occur as the market adjusts to the long-run equilibrium?
a. Each existing firm's demand curve shifts to the right. b. More firms exit the market. c. Each firm eliminates its excess capacity. d. Both a and b are correct.
The following graph shows average fixed costs, average variable costs, average total costs, and marginal costs of production.
Average variable cost is minimized when output equals:
A. 21 units. B. 25 units. C. 12 units. D. 6 units.