When firms enter a monopolistically competitive market:
a. product variety diminishes
b. the demand curves of established firms shift to the right.
c. prices fall.
d. profits increase.
c
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Use the following graph to answer the next question.
In the figure, AD1 and AS1 represent the original aggregate supply and demand curves. If Q1 is full-employment output, then the long-run aggregate supply curve is located at output level ________.
A. Q2 B. Q1 C. Q3 D. None of these choices are correct.
If the size of the underground economy is large,
A) government agencies have difficulty measuring nominal and real GDP. B) it is relatively easy to gather productivity data on many businesses. C) measuring real GDP is relatively easy, but measuring nominal GDP is difficult. D) measuring nominal GDP is relatively easy, but measuring real GDP is difficult.
Budget deficits are appropriate during
A. recessions, but not inflations. B. inflations, but not recessions. C. recessions and inflations. D. neither recessions nor inflations.
If a monopoly's demand curve shifts to the right, the
A) monopoly will charge a higher price. B) monopoly will charge a lower price. C) monopoly will sell more. D) monopoly's decision cannot be determined.