In theory, in the long run, monopolistically competitive firms earn zero profits.However, in reality there are some ways by which a firm can avoid losing profits. Which of the following is one such way?
A) gradually increase the mark-up on the goods produced
B) lower the price of its products to expand its market share
C) identify new markets and develop products precisely for those markets
D) find a market niche and keep it as narrow as possible so as to prevent other producers from entering this market segment
Answer: C) identify new markets and develop products precisely for those markets
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If we consider the equation PAE = A + bY the independent part of the equation that depends on income is:
A. PAE B. A C. Y D. b
Refer to Common Property I. The efficient level of production and consumption on the common property is
a. zero. b. Q1. c. Q2 d. cannot be determined from the graph.
A fall in the price level brings a ________ in the real wage rate that ________ profits which leads to ________
A) fall; increases; firms temporarily shutting down B) rise; reduces; firms restarting production C) rise; increases; firms temporarily shutting down D) rise; reduces; firms temporarily shutting down E) rise; increases; firms restarting production
A decrease in real GDP causes
A) movement downward along a money demand schedule. B) movement upward along a money demand schedule. C) a rightward shift of the money demand schedule. D) a leftward shift of the money demand schedule.