To analyze monopolistic competition in trade, we make several assumptions about the market. Which of the following is NOT an assumption of monopolistic competition?
a. many firms in the industry
b. easy entry and exit
c. constant long-run average cost
d. increasing returns to scale, falling long-run average cost
Ans: c. constant long-run average cost
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Efforts to reduce the unemployment rate are likely, in the short run, to lead to
A. a decrease in the inflation rate. B. an increase in the inflation rate. C. no change in the inflation rate. D. have no impact on unemployment.
For an investor who starts with dollars and wants to end up with dollars in the future, which of the following choices is an example that includes speculating?
A. Sell dollars at the spot rate, invest the proceeds in foreign currency-denominated financial instruments, and then buy dollars at the future spot rate B. Buy a dollar-denominated financial asset C. Sell dollars at the spot rate, invest the proceeds in foreign currency-denominated financial instruments, and sign a forward exchange contract to buy dollars D. Sell dollars at the spot rate, invest the proceeds in foreign currency-denominated financial instruments, and sign a forward exchange contract to sell the foreign currency
Potential GDP in the United States
A) does not change over time. B) grows as the economy grows. C) changes over a given business cycle. D) declines over time.
In 18th century Europe, governments gave guilds legal authority to limit production of goods. How did this authority either obstruct or improve the market mechanism?
A) It improved the market mechanism by making it more efficient because the guilds were able to quickly identify and rectify any market shortages and surpluses. B) It improved the market mechanism because the government's actions provided the correct set of signals to the market so that producers can adjust their output to better meet the needs of consumers. C) It obstructed the market mechanism because the guild's actions prevented the forces of demand and supply from coordinating the self-interested decisions of producers and consumers. D) It obstructed the market mechanism because with one more party having to coordinate activities (the guilds) there were delays in getting the products to consumers.