The more elastic a monopolistic competitor's long-run demand curve, the:
A. greater its excess capacity.
B. higher its price relative to that of a pure competitor having the same cost curves.
C. lower its long-run profit.
D. lower its average total cost at its profit-maximizing level of output.
Answer: D
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In the short run, a profit-maximizing firm will shut down if its total revenue is greater than its variable costs
Indicate whether the statement is true or false
As a country begins to liberalize its capital account, what would you expect to happen to the difference between the interest rates for similar assets in this country and another country with open capital markets?
A) get larger B) get smaller C) stay the same D) it depends on the existing exchange rate. E) exponential divergence
The nominal (money) rate of interest
a. is the real rate of interest plus the inflationary premium. b. can be expected to decline as inflation accelerates. c. fell to historic lows during the 1970s when the United States experienced double-digit rates of inflation. d. can be expected to increase when the government is running a budget surplus.
Draw a graph showing the effect on the market of the imposition of a quantity restriction. Show the effect on consumer and producer surplus.
What will be an ideal response?