As new firms enter a monopolistically competitive industry, the demand curve facing each existing firm will
A. shift to the left, but the elasticity of demand will not be affected.
B. not be affected because the new firms do not produce a perfect substitute for its product.
C. shift to the left and become more elastic because there are now more substitutes for its product.
D. shift to the left and become less elastic because there are now more substitutes for its product.
Answer: C
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Suppose the government cuts taxes. We would expect interest rates to ________ and the dollar to ________ in foreign exchange markets
A) rise; appreciate B) fall; depreciate C) rise; depreciate D) fall; appreciate
GDP does count:
a. state and local government purchases. b. spending for new homes. c. changes in inventories. d. none of these.
If the supply of oranges is unit elastic, the price elasticity of supply of oranges is
A. 1.0. B. 0.0. C. -1.0. D. -100.0.
Other things equal, if the fixed costs of a firm were to increase by $100,000 per year, which of the following would happen?
A. Marginal costs and average variable costs would both rise. B. Average fixed costs and average variable costs would rise. C. Average fixed costs would rise, but marginal costs would fall. D. Average fixed costs and average total costs would rise.