A benefit to consumers of monopolistically competitive markets is that:
A. consumers only have to choose from one product.
B. consumers have a variety of products from which to choose.
C. goods are sold at the lowest possible average cost of production.
D. price is equal to marginal cost in equilibrium.
Answer: B
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Compared to the GDP deflator, the consumer price index measures:
A) the price of all the goods and services produced in the economy. B) the price of a fixed market basket of goods and services. C) the price of exported goods and services. D) the price of wholesale goods and services.
On the graph above, a movement from point ________ to point ________ might represent a negative supply shock
A) H; G B) H; F C) F; I D) F; G E) none of the above
Inflation:
a. Never hurts the economy. b. Only hurts the economy as a whole when it is not expected. c. Never redistributes income and wealth. d. Hurts the economy when incentives are affected.
Consider monopoly, monopolistic competition, and perfect competition. In which of these three market structures does a profit-maximizing firm experience zero economic profit?
a. perfect competition only b. perfect competition and monopolistic competition only c. perfect competition, monopolistic competition, and monopoly d. The answer cannot be determined without knowing whether the market is in the long run or short run.