Monopolistic competition occurs in a market with free entry:
A. when there are only a few firms, each producing a unique product, prices above marginal cost and earns zero profit net of fixed costs.
B. when there is a large number of firms, each producing an identical product, prices above marginal cost and earns zero profit net of its fixed costs.
C. when there is a large number of firms, each of which produces a unique product, prices above marginal cost and earns zero profit net of its fixed costs.
D. when there is a large number of firms, each of which produces a unique product, prices above marginal cost and earns a positive profit net of its fixed costs.
C. when there is a large number of firms, each of which produces a unique product, prices above marginal cost and earns zero profit net of its fixed costs.
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Under pressure from Japan, the United States, and Europe, China announced it switched from pegging the yuan against the dollar to linking the value of the yuan to a 'basket' of currencies. The result of this change was
A) the value of the yuan increased slightly relative to the dollar. B) the value of the yuan has increased dramatically and is beginning to remove the trade imbalance between the United States and China. C) the value of the yuan has become very responsive to changes in demand and supply in the foreign currency market. D) the value of the yuan has decreased dramatically and has further spurred Chinese exports.
Consumers are willing to pay a higher price for a ________-quality good because it provides them with ________ benefits.
A) higher; less B) lower; more C) lower; less D) higher; more
Which of the following terms describes a restrictive practice that involves forcing the purchase of a second good when purchasing another good?
a. Exclusive dealing b. Predatory pricing c. Tying d. Bundling
"… two prostitutes came to the king (Solomon) and stood before him. One of them said, ‘My lord, this woman and I live in the same house. I had a baby while she was there with me. The third day after my child was born, this woman also had a baby. We were alone; there was no one in the house but the two of us.During the night this woman's son died because she lay on him. So she got up in the middle of the night and took my son from my side while I your servant was asleep. She put him by her breast and put her dead son by my breast. The next morning, I got up to nurse my son-and he was dead! But when I looked at him closely in the morning light, I knew that it wasn't the son I had borne.'The other woman said, ‘No! The living one is my son; the dead one is yours.'The king said, ‘Bring
me a sword.' So they brought a sword for the king. He then gave an order: ‘Cut the living child in two and give half to one and half to the other.'The woman whose son was alive was filled with compassion for her son and said to the king, ‘Please, my lord, give her the living baby. Do not kill him; she is his mother.'But the other said, ‘Neither I nor you shall have him. Cut him in two!'Then the king gave his ruling: ‘Give the living baby to the first woman. Do not kill him; she is his mother.'" 1 Kings 3:16-27 (NIV).King Solomon's actions in this passage illustrate the concept of: A. adverse selection. B. signaling. C. screening. D. moral hazard.