A perfectly competitive industry in long-run equilibrium is described as efficient because firms
A. produce at the low point on their average cost curve.
B. produce where marginal cost yields a profit.
C. earn no more than the cost of capital.
D. are not profitable.
Answer: A
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Which of the following most closely approximates the conditions of a monopolistically competitive market?
a. The market for Grade A eggs, which is characterized by a large number of firms producing a homogeneous product. b. The restaurant industry, which is characterized by firms producing a differentiated product in a market with low entry barriers. c. Local cable television service, where a licensed supplier competes with firms offering satellite service. d. The market for jumbo aircraft, where one major domestic firm competes with one major foreign firm.
If country A can produce more of practically everything than can country B, then which of the following statements is true?
A. Country A has no incentive to trade with country B. B. Trade can benefit both countries. C. Country B cannot have a comparative advantage in the production of any good that country A wants to buy. D. Country B has no incentive to trade with country A.
The balance of payments is
A) a summary record of the financial transactions of a country's government with foreign governments. B) a summary record of a country's imports and exports of goods with foreign residents and governments. C) a summary record of a country's economic transactions with foreign residents and governments. D) a summary record of a country's purchases and sales of goods and services in the world market.
According to rational expectations theory, instantaneous market adjustments make:
A. Expansionary economic policy more effective in increasing output B. Expansionary economic policy ineffective in increasing output C. Economic policy more rational and more stable D. Economic policy less rational and less stable