Monopolistically competitive firms engage in advertising to increase market share and make demand more inelastic
Indicate whether the statement is true or false
T
You might also like to view...
The demand curve in the figure above illustrates a product whose demand has a price elasticity of demand equal to
A) zero at all prices. B) infinity. C) one at all prices. D) a different amount at different prices.
Suppose 100 citizens each derive marginal benefit from submarines according to the function MB = 10 - Q. If subs cost $100 each to produce, what is the efficient quantity of submarines?
What will be an ideal response?
Suppose the demand for large (and therefore high-gasoline consumption) cars decreases sharply during an energy crisis. The most likely market adjustment would be
a. a sharp rise in the price of large cars in the short run as people rush to purchase these vehicles before producers cut back on manufacturing them. b. a moderate increase in short-run prices, followed by a larger long-run price increase as the supply of large cars is depleted. c. lower short-run prices, which will lead to an expansion in the number of large cars sold. d. a decrease in the price of large cars in the short run, leading to a reduction in output, which will moderate the price decline in the long run.
Which of the following would likely be studied by a macroeconomist rather than a microeconomist?
a. the effect of an increase in the alcohol tax on the market for beer b. the effect of foreign competition on the domestic auto industry c. the effect of a price war in the airline industry d. the effect of an increase in the minimum wage on an economy's overall rate of unemployment