Answer the following questions true (T) or false (F)
1. If a monopolistically competitive firm breaks even, the firm is earning as much in this industry as it could in any other comparable industry.
2. A monopolistically competitive firm that earns economic profits in the short run will be able to expand its market share even if the market size remains constant.
3. A monopolistically competitive firm that earns economic profits in the short run will face a more elastic demand curve in the long run.
1. TRUE
2. FALSE
3. TRUE
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Given the production possibility tables for the First and Second Bakeries shown, we know that the opportunity cost of producing cookies:First BakerySecond BakeryCookiesPiesCookiesPies018091012306206603300900
A. is higher at Second Bakery. B. is the same at both bakeries. C. is higher at First Bakery. D. cannot be computed without further information.
A classical IS—LM model of the world economy can be used to show that in a flexible exchange-rate system, a temporary increase in government purchases will cause
A) output and the real interest rate to rise, which reduces net exports but has an ambiguous effect on the real exchange rate. B) output and the real interest rate to rise, which increases net exports but has an ambiguous effect on the real exchange rate. C) output to rise and the real interest rate to fall, which reduces net exports and causes the exchange rate to depreciate. D) the real interest rate to fall, which causes the exchange rate to rise, which reduces net exports.
Abstract economic theory can be used by academicians, but not by politicians or business people
a. True b. False Indicate whether the statement is true or false
Which of the following will not cause an increase in U.S. gross exports?
A. An increase in foreign business investment. B. A decrease in U.S. imports. C. An increase in foreign consumer income. D. An increase in foreign wealth.