In the long run, monopolistically competitive firms produce a level of output such that:
A. ATC > minimum of average costs.
B. P > MC.
C. P = ATC.
D. All of the statements associated with this question are correct.
Answer: D
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William Nordhaus' depletion hypothesis
A) is an attempt to explain the drop in the multifactor productivity growth rate between 1913 and 1964. B) suggests that depletion of natural resources may explain part of the drop in multifactor productivity growth. C) suggests that a drop in the rate at which new inventions are made may explain part of the drop in multifactor productivity. D) B and C E) all of the above
Refer to the above graph. Assume that the economy initially has a price level of P2 and output level Q2. The price level is flexible and the government decides to adopt a contractionary fiscal policy. What would most likely be the new equilibrium price level and output?
A. P2 and Q2 B. P1 and Q1 C. P2 and Q4 D. P1 and Q3
One way to ensure cooperation in an infinitely repeated simultaneous game is
A) to always play the dominant strategy. B) to punish the player that reneges on agreements. C) to never punish any player. D) to always punish all players.
The largest component of national income is:
A) compensation of employees B) proprietor's income C) rental income D) corporate profits