What accounts for the fact that profit is zero in the long-run equilibrium in monopolistic competition?
a. Firms have excess capacity.
b. Firms spend too much on product development.
c. Firms are too small relative to the market.
d. There are no barriers to the entry of new firms.
Answer: d. There are no barriers to the entry of new firms.
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The coupon rate is the:
A. regular payment of interest to a bondholder. B. interest rate promised when a bond is issued. C. maximum interest rate that can be paid on a bond. D. amount originally lent.
A decrease in interest rates will
A) shift the investment function relating planned investment to the interest rate to the left. B) be a movement along the investment function relating planned investment to the interest rate. C) shift the investment function relating planned investment to the interest rate to the right. D) have no impact on the investment function relating planned investment to the interest rate.
The freedom of consumers to cast their dollar votes to buy, or not to buy, at prices determined in competitive markets describes:
a. socialism. b. communism. c. consumer sovereignty. d. the aspirations of Karl Marx.
In general, information asymmetries are _________________ within financial markets.
A. common B. not accounted for C. uncommon D. not easily accounted for