One difference between a perfectly competitive market and a monopolistically competitive market is that
A) there is no product differentiation in monopolistic competition.
B) there are no barriers to entry in monopolistic competition.
C) there is no product differentiation in perfect competition.
D) there is strategic interaction among firms in monopolistic competition.
E) there are no barriers to exit in monopolistic competition.
Ans: C) there is no product differentiation in perfect competition.
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Ricardo buys cola and popcorn. Cola sells for $0.50 a can and popcorn sells for $1 per bag. He is in consumer equilibrium. The price of a cola jumps to $1 per can. In his new consumer equilibrium, Ricardo's
A) marginal utility of cola will be equal to his marginal utility of popcorn. B) marginal utility per dollar spent will be 2. C) total utility will be higher. D) marginal utility of cola will decrease.
When long-run average total cost decreases as output increases, a firm experiences
a. increasing average fixed cost b. decreasing total cost c. economies of scale d. diseconomies of scale e. constant returns to scale
If the United States raises tariffs on foreign goods, it may achieve
A. Higher efficiency in domestic production. B. Higher U.S. exports. C. Higher production possibilities. D. Greater profitability of import-competing firms.
A year-long drought that destroys most of the summer's crops would be considered a:
A. short-run supply shock. B. long-run demand shock. C. long-run supply shock. D. short-run demand shock.