The above figure shows the demand and cost curves for a firm in monopolistic competition. In the long run, the demand for this firm's product will
A) decrease as other firms enter the industry.
B) decrease as product differences disappear.
C) become less elastic as firms exit the industry.
D) become less elastic as other firms enter the industry.
A
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Payroll tax is a proportional tax.
Answer the following statement true (T) or false (F)
In the Fixed Time Effects regression model, you should exclude one of the binary variables for the time periods when an intercept is present in the equation
A) because the first time period must always excluded from your data set. B) because there are already too many coefficients to estimate. C) to avoid perfect multicollinearity. D) to allow for some changes between time periods to take place.
Suppose in the year 2000 Ken earned $60,000 per year and that in 2015 he earned $78,000 per year. If the CPI in the year 2000 was 172.2 and in 2015 was 236.7, which of the following statements is correct? a. Ken's standard of living got better from 2000 to 2015
b. If Ken had earned $81,000 in 2015, his standard of living would have improved relative to his income in 2000. c. Ken would have needed to earn $87,000 or more in 2015 for his standard of living to have improved relative to his income in 2000. d. If Ken had earned $83,000 in 2015, his standard of living would have improved relative to his income in 2000.
You explain to your friend Haslina, who runs a catering service called "Meals in a Zip," about an economic theory which asserts that consumers will purchase less of a product at higher prices than they will at lower prices
She contends that the theory is incorrect because over the past two years she has raised the price of her catered meals and yet has seen a brisk increase in sales. How would you respond to Haslina? A) Haslina is making the mistake of assuming that correlation implies causation. B) I will explain to her that there are some omitted variables that have contributed to an increase in her sales such as changes in income. C) I will explain to her that she is making the error of reverse causality: it is the increase in demand that has enabled her to raise her prices. D) Haslina is right; she has evidence to back her claim. The theory must be erroneous.