We know that monopolistically competitive firms prevent the efficient use of resources because they produce where
A. P > ATC.
B. MR > P.
C. P > MC.
D. P = MC.
Answer: C
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When government expenditures are greater than tax revenues
A) there will be budget surplus. B) the public debt will be reduced. C) there will be budget deficit. D) automatic stabilizers do not kick in.
The Coase Theorem states that _____
a. in the absence of transactions costs, the allocation of resource will be independent of property right assignment b. in the absence of transactions costs, the allocation of resources will be dependent on property right assignment c. with transactions costs, the allocation of resources will be independent of property right assignment d. with transactions costs, the allocation of resources will be dependent of property right assignment
Using Figure 1 above, if the aggregate demand curve shifts from AD1 to AD2 the result in the short run would be:
A. P1 and Y2. B. P3 and Y1. C. P2 and Y2. D. P2 and Y3.
If the nominal interest rate was 12 percent and the inflation rate was 10 percent in 1980, while the nominal interest rate was 7 percent and the inflation rate was 2 percent in 2001, then
A. real rates were higher in 2001. B. real rates were higher in 1980. C. credit was more expensive in 1980. D. credit was cheaper in 2001 because the nominal rate was lower.