What is the major difference between the long run and the short run in pure competition? Explain in terms of the number of firms and the flexibility of firms
What will be an ideal response?
In the short run there is no entry or exit of firms in pure competition. The number of firms and plant size is fixed. Firms can either produce or shut down. If they shut down, they do not have time to liquidate their assets or go out of business. In the long run there can be entry and exit of firms into an industry. Firms that shut down in the short run because they are experiencing economic losses will eventually liquidate assets and go out of business if the losses persist over time. Existing firms in the long run can expand or contract their capacity to produce. In the long run, new firms can enter an industry and increase the industry output.
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Economic analysis requires us to combine:
A. unlimited resources with limited wants. B. theory with observations. C. developed and developing nations. D. republicans and democrats.
Oligopolistic firms
A. pay close attention to the actions of their rival firms. B. are so few in number that at least one firm has some control over price. C. charge a price that is higher than its ATC. D. All of the choices are true.
The primary method for controlling the money supply in the United States is to limit the:
A. Amount of currency that is printed.
B. Amount of money that is spent by changing income transfers.
C. Amount of money that is spent by changing tax policy.
D. Volume of loans the banking system can make.
Producing a differentiated product occurs in which of the following industries?
A) oligopoly, monopolistic competition, and perfect competition B) monopolistic competition only C) oligopoly only D) monopolistic competition and oligopoly