In the long run, the economic profits for a monopolistically competitive firm will be
A. slightly more than the profits of a purely competitive firm.
B. the same as the profits for a purely competitive firm.
C. the same as the profits for a monopolist.
D. slightly less than the profits of a monopolist.
Answer: B
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Ultimately, short-run supply curves are upward sloping because of
a. the irrelevance of fixed costs to the firm's decision making. b. the factor-price effect. c. diminishing marginal returns to the variable inputs. d. the equality of demand and marginal revenue for competitive firms.
One argument for having the government regulate natural monopolies is that without regulation ________.
A. the industry would become perfectly competitive and there would be too many firms in the market to achieve efficiency B. these monopolies produce at a level where price is greater than marginal cost C. these monopolies produce at a level where price is less than marginal cost D. these monopolies usually produce things that are potentially harmful to our health
The quantity theory of money and prices
A) is derived from the equation of exchange assuming that prices remain constant. B) shows how a change in the price level leads to a change in the money supply. C) shows how the demand for money is inversely related to the price level. D) is the hypothesis that changes in the money supply leads to proportional changes in the price level.
Prices communicate information about relative availability of products. For example, a decrease in the price of corn signals to consumers and producers that: a. consumers are buying more corn than before
b. corn is relatively more abundant than before. c. corn is relatively less abundant than before. d. consumers are stocking up on corn because of the predictions of a cold winter.