Which of the following is an accurate statement about monopolistic competition?
a. It has a low level of competition among sellers.
b. It sells virtually identical products.
c. It has elements of both monopoly and perfect competition.
d. It has no need to use advertising.
c. It has elements of both monopoly and perfect competition.
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Long-run equilibrium under monopolistic competition requires that
A. the demand curve intersects the average cost curve. B. the demand curve be tangent to the average cost curve. C. price be equal to marginal cost. D. quantity produced be at the point where average cost is at a minimum.
Efficiency wages are
A) the result of demographic change. B) set below the equilibrium level of the real wage. C) offered by firms who want to reduce turnover in the labor force. D) special wages offered to teenagers. E) mandated by law.
If the equilibrium price of lettuce is $.80 per head and the government imposes a price floor of $.70 per head, the price of lettuce will
A. decrease to $.70. B. remain at $.80. C. decrease to $.75. D. be impossible to determine.
The story in the text about playing tennis outside even though you paid for an inside court illustrates which of the following?
A. Rational choice analysis is what comes naturally to most people. B. Psychologically, people often do not treat sunk cost as irrelevant to a decision. C. People will make efficient decisions without knowing what they are doing. D. All of these are implied by the tennis court story.