The long-run equilibrium of monopolistic competition is characterized by
A. P = MC > ATC.
B. P = MR = MC.
C. P = ATC > MC.
D. P = MC = ATC.
Answer: C
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Natural monopolies are of theoretical, but not practical interest.
Answer the following statement true (T) or false (F)
Opportunity cost: a. Always refers to the dollar price paid for a good
b. Always equals the best alternative value of the time spent in going to a concert or sporting event. c. Of any good is zero for any good that is given away free, if you wait in a line to get it. d. Increases when the best foregone alternative becomes more valuable.
Describe the Keynesian transmission mechanism for a decrease in the money supply. Assuming that no liquidity trap exists, that investment is interest-sensitive, and that the economy is in the horizontal portion of the AS curve, what happens to Real GDP and the price level? How can you tell if this is a direct transmission mechanism or an indirect one?
Marginal revenue equals
A. price times quantity, divided by average revenue. B. the change in total revenue from selling one more unit. C. total revenue divided by output. D. total revenue divided by average revenue.