If a firm in monopolistic competition lowers its price, what will happen to the quantity of products it sells?
a. The quantity of products sold will increase and sales revenue will fall.
b. The quantity of products sold will decrease because this is not perfect competition.
c. The quantity of products sold will increase slightly—and in some cases not at all.
d. The quantity of products sold and sales revenues will increase as the firm lures customers from its competitors and attracts new customers.
Ans: d. The quantity of products sold and sales revenues will increase as the firm lures customers from its competitors and attracts new customers.
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According to this Application, one solution proposed to deal with the rising expenses of government entitlement programs is to raise taxes. An increase in taxes to help cover the rising expenses of entitlement programs would
A) increase aggregate demand, shifting the AD curve to the left. B) decrease aggregate demand, shifting the AD curve to the left. C) decrease aggregate demand, shifting the AD curve to the right. D) increase aggregate demand, shifting the AD curve to the right.
In the above figure, if the real wage is $10 per hour, a labor
A) shortage will occur and the real wage will rise. B) shortage will occur and the real wage will fall. C) surplus will occur and the real wage will rise. D) surplus will occur and the real wage will fall.
If a cartel can earn a profit, it will increase production as long as
a. MR > MC b. MR > ATC c. MC > MR d. MR < AR e. MR > AVC
What are property rights?