If there are many firms in an industry producing goods that are similar but slightly different, this is an example of
A. Oligopoly.
B. Perfect competition.
C. Monopoly.
D. Monopolistic competition.
Answer: D
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Refer to the above figure. Suppose the U.S. economy is currently operating at point C. Which of the following actions would you recommend to the president of the United States?
A) Engage in contractionary fiscal policy by reducing government spending. B) Reduce taxes to stimulate investment, consumption and net exports. C) Increase government spending while holding taxes constant. D) Reduce the interest rate to stimulate investment minimizing the crowding out effect.
Refer to Figure 2.1. What is the opportunity cost of increasing production of manufactured products from 500 tons to 600 tons per year?
A) 200 tons of agricultural products per year B) 400 tons of agricultural products per year C) 500 tons of agricultural products per year D) 600 tons of agricultural products per year
Consumers tend to maximize:
a. marginal utility. b. marginal utility per dollar. c. total utility. d. money holdings. e. consumer surplus.
In the IS-LM model, changes in taxes initially affect planned expenditures through
A. Consumption. B. Investment. C. Government spending. D. the interest rate