How is the long-term result of entry and exit in a perfectly competitive market different from that in a monopolistically competitive market?
The long-term result of entry and exit in a perfectly competitive market is that all firms sell at the price level determined by the lowest point on the average total cost curve. Thus, perfect competition is productively efficient. However, in monopolistic competition, the end-result of entry and exit is that firms land on a price that lies on the downward-sloping portion of the average total cost curve rather than the very bottom of the average total cost curve. Thus, monopolistic competition is not productively efficient.
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What happens typically to a budget deficit during a recession?
A. It increases because of tax changes. B. It decreases because of spending decreases. C. It decreases automatically. D. It increases automatically.
The regulation of natural monopolies is common in which of the following industries?
A. Electricity B. Tobacco C. Oil D. Alcohol
Which of the following are the two categories of investment measured in the expenditure approach?
a. durable investment; nondurable investment b. fixed investment; inventory investment c. capital investment; noncapital investment d. gross investment; net investment
When the Fed sells bonds in the open market, we can expect the
A) exchange rate to rise and interest rates to fall. B) exchange rate and interest rates to rise. C) exchange rate to fall and interest rates to rise. D) exchange rate and interest rates to fall.