In the long run, a representative firm in a monopolistically competitive industry will end up
A. producing a level of output at which marginal cost and price are equal.
B. having an elasticity of demand that will be less than it was in the short run.
C. earning a normal profit, but not an economic profit.
D. having a larger number of competitors than it will in the short run.
Answer: C
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Give a complete but concise definition of the following terms. a. perfect competition b. perfectly competitive firm's demand curve c. shutdown point d. long-run equilibrium in perfect competition
What will be an ideal response?
Moving from one point on the production possibilities frontier to another ________
A) involves a tradeoff but does not incur an opportunity cost B) involves an opportunity cost but no tradeoff C) involves a tradeoff and incurs an opportunity cost D) involves no tradeoff but it does incur an opportunity cost
In the basket of goods that is used to compute the consumer price index, which of the following categories of consumer spending is the largest?
a. education & communication b. recreation c. medical care d. All of the above categories are about equal in magnitude.
Increases in inflation redistribute resources from ________-spending to ________-spending households and hence, ________ short-run equilibrium output.
A. low; high; increase B. low; high; decrease C. high; low; increase D. high; low; decrease