Is it true that in the long run, a monopolistically competitive firm has market power but earns no profit? Explain
What will be an ideal response?
As strange as it sounds, yes. The firm earns zero profit because p = AC. The firm has market power because p > MC. One way to explain this is that the firm has market power to set price, but has no power to prevent entry.
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On the graph above, assuming that G = 0 and NX = 0, the labeled point at which saving is lowest is point ________
A) A B) B C) G D) H E) not inferable from the information given
Which of the following would not be considered price discrimination?
a. Long distance telephone rates are cheaper late at night. b. Airline fares are cheaper if you reserve several weeks in advance. c. The price of lettuce is 59 cents a head and two for a dollar. d. The price of a brand-name prescription drug is higher than the price of a generic brand. e. Senior citizens pay less for a movie.
The Added Perspective in the text refers to the success—or lack of success—of econometric computer models as an aid in economic forecasting. It argues that they have
a. sharpened forecasts to such an extent that they are almost 100 percent reliable b. eliminated all "errors and omissions" in forecasting models c. worsened the success to non-success ratio of economic forecasts d. led to better predictions but still cannot forecast major "turning points" e. not led to better predictions except in forecasting major "turning points"
At equilibrium GDP
A. Savings = investment, but aggregate demand does not equal aggregate supply. B. Savings = investment and aggregate demand = aggregate supply. C. Savings does not equal investment and aggregate demand does not equal aggregate supply. D. Savings does not equal investment, but aggregate demand = aggregate supply.