The demand for the product of a monopolistically competitive firm is highly elastic when
A) firms collude.
B) there are fewer firms in the industry.
C) there is a lot of product differentiation.
D) there are a lot of close substitutes.
D
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In the above figure, suppose that the government sets a limit that may be produced of 10 units of output and the price rises to $4. The total deadweight loss would be
A) $0. B) $10. C) $15. D) $20.
After OPEC raised the price of crude oil in the 1970's, which of the following was the most important reason that there were shortages of gasoline? a. Americans drove large, gas-guzzling vehicles
b. The increase in the price of crude oil by OPEC. c. The effects of a price ceiling on gasoline prices imposed by the US government. d. Increased commuting times resulting from traffic congestion.
If the tax on a good is doubled, the deadweight loss of the tax
a. increases by 50 percent. b. doubles. c. triples. d. quadruples.
According to the law of demand, when the price of a good falls
A. the quantity of the good supplied will decrease to meet the decreased demand. B. the quantity of the good supplied will increase to meet the increased demand. C. the quantity of the good demanded tends to fall. D. the quantity of the good demanded tends to rise.