Production of Hollywood movies is an increasing cost industry. Which of the following contributes the most to this condition?
a. The demand for carpenters to build sets
b. The demand for painters to paint the theaters
c. The demand for printers to print tickets
d. The cost of advertising for the shows
e. The cost of hiring known box-office superstars
E
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If national saving decreases
A) the sum of domestic investment and foreign investment must increase. B) the sum of domestic investment and foreign investment must decrease. C) foreign investment must increase to cover the loss. D) the sum of domestic investment and net exports must increase.
One assumption of the model of perfect competition is that entry into the market is easy. This implies that:
a. there are government licensing requirements for a firm to enter the market. b. there are no significant economies of scale relative to the size of the market. c. one firm has gained a patent in the industry. d. significant economies of scale do exist in the industry. e. there is no government intervention.
If the desired amount demanded is greater than the desired amount supplied, then:
a. Business inventories could be rising or falling, depending on how they are valued. b. Business inventories are falling. c. Increases in residential construction are usually the reason, because they are measured at the end of each period. d. It is impossible for demand to be greater than supply, because supply limits demand. e. None are correct.
If a firm in a monopolistically competitive market successfully uses advertising to decrease the elasticity of demand for its product, the firm will
a. be able to increase its markup over marginal cost. b. eventually have to reduce price to remain competitive. c. increase the welfare of society. d. reduce its average total cost.