If a monopolistically competitive firm is earning economic profits in the short run:
A. its output will increase in the long run.
B. these profits will persist in the long run because of the firm's limited monopoly power.
C. price will be driven down to minimum average total cost in the long run.
D. these profits will be eliminated in the long run as new firms enter the industry.
Answer: D
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Since World War II, the U.S. economy has been characterized by
a. extremely high rates of inflation b. decreases in the price level c. ongoing inflation d. zero inflation e. a continually falling rate of inflation
In equilibrium, the expected future spot rate is equal to the:
a. current spot rate. b. current interest rate. c. interest rate spread. d. current forward rate.
Refer to the graph shown. If the marginal cost external to the trade associated with the use of gasoline is $0.10 per gallon, the point on the graph corresponding to the efficient quantity and price is:
A. K. B. L. C. H. D. G.
Because of diminishing marginal productivity,
A. the labor demand curve is negatively sloped. B. nominal wages are sticky in a downward direction. C. households save only a small share of their income. D. the labor supply curve is not vertical.