How does a firm in monopolistic competition decide whether to operate at a loss or shut down in the short run?
What will be an ideal response?
A firm in monopolistic competition will continue to operate in the short run as long as the price it charges is sufficient to cover variable costs. If it is not, the firm will shut down and suffer losses equal to its fixed costs. Incidentally, this rule applies to a firm operating in any type of market structure.
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Regulation of monopolies is justified on the ground that a monopolist sells too less at a too high price
a. True b. False Indicate whether the statement is true or false
If the exchange rate falls, domestic goods become relatively ______ expensive. This change in the affordability of domestic goods makes domestic goods _____ attractive to domestic residents. So, _______ ______
Fill in the blank(s) with correct word
Refer to the information provided in Figure 2.5 below to answer the question(s) that follow.
Figure 2.5Refer to Figure 2.5. The marginal rate of transformation in moving from Point B to Point A is
A. -2/3. B. -3/4. C. -1.5. D. -20.
Which of the following statements would Milton Friedman agree with concerning the conduct of monetary policy?
A. Information lags are short, enabling the central bank to respond quickly to changes in the economy. B. Wage and price adjustments are relatively slow, so changing the money supply will have a minimal impact on the real economy. C. There is little uncertainty over the effect of a change in the money supply on the economy. D. There are long and variable lags between monetary policy actions and their economic results.