Can a monopolistically competitive firm producing a good with lots of very close substitutes earn large positive profits in the long run?
What will be an ideal response?
No, because monopolistically competitive firms are in industries that have no significant barriers to entry, the presence of large profits in the short run will entice other firms to enter into the market. This will cause the price of the good to decrease, and the profits earned by the firms in the industry to be wiped out.
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On the modern Phillips curve, the initial impact of an increase in the world price of steel is shown by ________
A) an upward movement along the Phillips curve to a higher inflation rate B) an upward shift of the Phillips curve leading to higher inflation rates for any unemployment rate C) a downward shift of the Phillips curve leading to lower inflation rates for any unemployment rate D) a downward movement along the Phillips curve to higher unemployment rates E) none of the above
Suppose the observed annual quantity of steel exchanged in the European market is 30 million metric tons, and the observed market price is 90 euros per ton
If the price elasticity of demand for steel is -0.3 in Europe, what is an appropriate value for the price coefficient (b) in a linear demand function Q = a - bP? A) b = 0.9 B) b = -0.9 C) b = 0.1 D) b = -0.1
Sharon wants a career as an accountant. During the summer she turns down a job painting houses at $6 an hour to work in an accounting office for $4 an hour. Which of the following would not explain her choice?
a. Accounting is more prestigious. b. The summer accounting job will help her get a full-time job in accounting when she graduates. c. She prefers to work inside. d. She would face the law of diminishing marginal utility if she had more goods. e. She dislikes the messiness of painting.
When people buy land, their purchases are included in GDP
a. True b. False