All of the following are characteristics of a monopolistically competitive industry EXCEPT
A) homogeneous products.
B) many firms.
C) low barriers to entry and exit.
D) sales promotion and advertising.
Answer: A
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Which of the following theories applies to strategic behavior?
a. Field Theory b. Game Theory c. Theory of Consumers' Behavior d. Social Contract Theory e. Rational Choice Theory
Most modern monetarists believe that
A. the capitalist system is inherently unstable and unpredictable. B. structural economic changes are major causes of business cycles. C. inflation is explained by too rapid a rate of growth of the nominal money supply, resulting in "too much money chasing too few goods." D. deflations are caused by contagious pessimism among investors.
Collusion is a situation where businesses:
A. act in their own self-interest and ignore what the other businesses are doing. B. have noncooperative outcomes, because they compete outside the public eye. C. agree to cooperate, and the U.S. government works hard to encourage this behavior. D. agree to cooperate, and their behavior does not serve the public interest.
In order to bring a market to its efficient outcome when a negative externality is present, the government could:
A. tax the parties involved in the market the value of the external cost. B. limit the price to the efficient level. C. limit total consumption to the efficient quantity. D. Any of these would bring the market to its efficient level.