In monopolistic competition, the long-run equilibrium results in zero economic profit of the firms in these industries. The key factor in this is
A. differentiated products.
B. freedom of entry into and exit from the industry.
C. price discrimination.
D. brand names.
Answer: B
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The expansion phase of the business cycle is typically associated with higher ________ and lower ________.
A. employment; income B. real GDP; unemployment C. income; real GDP D. unemployment; output
Which of the following is a true statement regarding why the government produces public goods?
a. Public goods are valued highly by some but not by the majority. b. Because of the electoral system, the public sector tends towards producing those goods that help politicians get elected. c. Some goods should be produced whether they are economically efficient or not. d. Because it is difficult to exclude those who do not pay for public goods.
Suppose the economy is initially in long-run equilibrium and then it experiences a supply shock in the form of sharply higher energy prices. Which of the following is true?
a. The short-run aggregate supply curve shifts leftward and the long-run supply curve shifts rightward. b. The short-run aggregate supply curve shifts rightward and there is a movement along the aggregate demand curve. c. The short-run aggregate supply curve does not shift and the long-run aggregate supply curve shifts rightward. d. The short-run aggregate supply curve shifts rightward but the long-run aggregate supply curve does not shift. e. The short-run aggregate supply curve shifts leftward and there is a movement along the aggregate demand curve.
The Stogie Shop, a cigar store in the mall, sells hand-rolled cigars for $10.00 and machine-made cigars for $2.50 each. What is the opportunity cost of buying a hand-rolled cigar?
A) $10.00 B) 4 machine-made cigars C) $2.50 D) one-quarter of a machine-made cigar