Which of the following statements about a monopolistically competitive firm is TRUE?
A) A monopolistically competitive firm does not always equate marginal cost to marginal revenue because it uses other means to maximize profits.
B) A monopolistically competitive firm maximizes profits by charging a price equal to marginal cost.
C) A monopolistically competitive firm produces the quantity at the point at which the demand curve crosses the marginal cost curve.
D) A monopolistically competitive firm maximizes profits when it produces the quantity at which marginal cost equals marginal revenue.
D
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The supply of a good will tend to be highly elastic if
A) additional resources to produce the good can be obtained quickly and with no increase in cost. B) its price rises quickly and sharply when the demand increases. C) the good has few close substitutes. D) the good is generally classified as a luxury. E) the good is generally classified as a necessity.
Paul Romer, an economist at Stanford University, is most closely associated with what economic theory?
A) the process of creative destruction B) the Communist Manifesto C) new growth theory D) labor productivity theory
If the interest rate is 10 percent, what is the present value of an asset that yields an annual return of $10,000?
a. $1,000 b. $10,000 c. $1,000,000 d. $100,000 e. not enough information to determine
Suppose that the inverse demand for a downstream firm is P = 150 ? Q. Its upstream division produces a critical input with costs of CU(Qd) = 5(Qd)2. The downstream firm's cost is Cd(Q) = 10Q. When there is no external market for the downstream firm's critical input, the net marginal revenue for the downstream firm is:
A. NMRd = 140 ? Q. B. NMRd = 140 ? 2Q. C. NMRd = 150 ? Q. D. NMRd = 150 ? 2Q.