For a firm in monopolistic competition to undertake product development, the marginal cost of the development must be ________ the marginal benefit of the development to consumers
A) greater than
B) less than
C) not comparable to
D) equal to or less than
E) None of the above because a monopolistically competitive firm undertakes product development if the marginal cost of the development is less than or equal to the marginal revenue to the firm from the development.
E
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Suppose that at the beginning of a loan contract, the real interest rate is 4% and expected inflation is currently 6%. If actual inflation turns out to be 7% over the loan contract period, then
A) lenders gain 3% of the loan value. B) borrowers lose 3% of the loan value. C) lenders gain 1% of the loan value. D) borrowers gain 1% of the loan value.
Assume the economy is initially in equilibrium where potential GDP is greater than real GDP
If the expected inflation rate, the term structure effect, and the default-risk premium are constant, a decrease in the Fed's target short-term nominal interest rate will ________ the MP curve and the output gap will become ________. A) shift up; smaller B) shift up; larger C) shift down; smaller D) shift down; larger
The union shop represents a compromise over labor's control of the labor supply
Indicate whether the statement is true or false
A voluntary exchange between Mike (the purchaser) and Wayne (the seller) occurs because
A. Mike stands to gain and Wayne to lose. B. Mike stands to lose and Wayne to gain. C. they had no choice. D. they both gain from the transaction.