In the long run, a firm in monopolistic competition will
A) make a negative economic profit, that is, an economic loss.
B) make zero economic profit, that is, a normal profit.
C) make a positive economic profit.
D) None of the above answers is necessarily correct because the amount of the profit or loss depends on the slope of the demand curve.
B
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Hermione and Ron are at a sweet shop in London. Hermione looks at the prices of ice cream and chocolate bars and says to Ron: "I can tell you what your marginal rate of substitution between ice cream and chocolate bars is at your best affordable
point." "No, you can't," says Ron. "You don't know my preferences and how much money I have." "I don't need to know all this because I know the prices," Hermione replies. Is she right? Explain.
Under the Bretton Woods Agreement, the goal of the IMF was to
A) finance international transactions in gold. B) lend to countries experiencing balance of payment deficits. C) help less developed countries advertise their goods in the developed countries. D) provide oversight to the functioning of central banks in the member countries.
A natural monopoly arises in an industry in which the per-unit cost of production is: a. lowest when there are a large number of producers in the industry. b. lower for the smaller firms than for larger firms
c. minimized at the output where the industry's profit is maximum. d. lowest when a single firm produces the entire output of the industry.
An efficient economy is an economy
A. that distributes output equally among all consumers. B. in which output is steady or growing and there is low inflation. C. that produces what consumers demand and does so at the least possible cost. D. in which there is a fair distribution of wealth.