Monopolistically competitive firms may not be able to produce goods at the lowest possible average cost. This statement is describing how monopolistically competitive firms might be _____.

(A) Without economies of scale.
(B) Unable to engage in price fixing.
(C) Lacking differentiation.
(D) Unsuccessful at nonprice competition.


Ans: (A) Without economies of scale.

Economics

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The interest rate is 4 percent in the U.K. and 3 percent in the U.S. for 90 days. The current spot rate is $2.00/£ and the forward rate is $1.96/£. If a U.S.-based investor expects the spot rate to remain at $2.00/£ in 90 days, the expected uncovered interest rate differential would be ________ in favor of the ________ investment.

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Economics