Answer the following statements true (T) or false (F)
1. As more firms enter a monopolistic competitive industry, average revenue will fall for existing firms.
2. In an oligopoly, the pricing policy of each firm is independent of that of other firms.
3. A kinked demand curve results when one firm’s price changes are followed downward but not upward by competing firms.
4. In the long run, economic profits tend to be eliminated under conditions of monopolistic competition.
5. Predatory pricing involves charging different customers different prices for the same good.
1. TRUE
2. FALSE
3. TRUE
4. TRUE
5. FALSE
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A decision by foreign central banks to sell their holdings of U.S. Treasury bonds will
A) lower bond prices and interest rates in the United States. B) increase bond prices and lower interest rates in the United States. C) lower bond prices and increase interest rates in the United States. D) increase bond prices and interest rates in the United States.
_____ prefer a quota to an import tax
a. Foreign producers b. Importers c. Consumers d. Foreign consumers
Automatic stabilizers combine changes in discretionary fiscal policy with changes in government spending and taxes influenced by the business cycle in order to stabilize the economy
a. True b. False Indicate whether the statement is true or false
Which of the following is an example of a good with a highly elastic supply curve?
a. luxury goods b. tropical vacations c. pizza d. sports vehicles