Answer the following statements true (T) or false (F)
1. If there are many firms in an industry, then it must be a purely competitive market.
2. The basic difference between pure competition and monopolistic competition is in the number of firms in the industry.
3. Competitive firms are price takers largely because of intensive advertising by their competitors.
4. For a purely competitive firm, the demand curve facing it is the same as its marginal revenue curve.
5. In pure competition, the industry demand curve is infinitely price elastic.
1. FALSE
2. FALSE
3. FALSE
4. TRUE
5. FALSE
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A small commercial bank has $10,000 in actual reserves, $60,000 in deposits, and has a 10 percent desired reserve ratio. Its excess reserves are
A) $4,000. B) $10,000. C) $50,000. D) $6,000.
Answer the following statements true (T) or false (F)
1. Price elasticity of demand tends to be greater for substitute items than for complementary goods. 2. If income increases and the demand for a product increases, the product is a normal good. 3. The more substitutes for a good, the more elastic its demand tends to be. 4. The total quantity of a good offered for sale is unaffected by estimates by sellers of the probable costs of producing the good in the future. 5. The total quantity of a good offered for sale is unaffected by estimates by sellers of the probable costs of producing the good in the future.
The opportunity cost of capital is
A) the rate of return realized on an investment. B) the rate of return that could be earned by the owner's capital were it used elsewhere. C) the rate used to calculate a firm's tax liability. D) the rate of interest the government uses to calculate legal business tax penalties.
Taxes cause:
a. Market distortions b. Reduce incentives to work c. Decrease wealth creating transactions d. All of the above