The demand curve facing a monopolistic competitor is
a. a horizontal line at the market price
b. upward sloping
c. perfectly elastic
d. perfectly inelastic
e. downward sloping
E
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The principle of minimum differentiation suggests that competitors
A) try to distinguish themselves by offering highly different products. B) try to gain the largest market share by differentiating a popular product. C) tend to make identical goods in order to appeal to the largest number of consumers. D) try to decrease costs by minimizing the differences in the types of resources used.
The largest component of household consumption spending is expenditures on
a. services b. durable goods c. nondurable goods d. food e. transportation
Which of the following is an example of the wealth effect during a period of inflation?
A. A firm receives a fixed price for the services it sells while the price level is rising B. You hold money in a savings account that earns 5 percent interest while the price level doubles C. Your income stays constant while the price level doubles D. You pay for utilities that are becoming more expensive as the price level is rising
The concentration and Herfindahl indices computed by the U.S. Bureau of Census must be interpreted with caution because:
A. Both they overstate the actual level of concentration in markets served by foreign firms and they understate the degree of concentration in local markets, such the gasoline market are correct. B. they understate the degree of concentration in local markets, such the gasoline market. C. they overstate the actual level of concentration in markets served by foreign firms. D. None of the statements are correct.