In monopolistic competition, the end result of entry and exit is that firms end up with a price that lies on the downward-sloping portion of the average cost (AC) curve, not at the very bottom of the AC curve. This means that monopolistic competition will:
a. be productively efficient.
b. display allocative efficiency, but only in the short run.
c. not be productively efficient.
d. display allocative efficiency, but only in the long run.
c. not be productively efficient.
In monopolistic competition, the end result of entry and exit is that firms end up with a price that lies on the downward-sloping portion of the average cost (AC) curve, not at the very bottom of the AC curve. Thus, monopolistic competition will not be productively efficient.
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Trade based on comparative advantage benefits:
A. producers in all countries but not consumers. B. consumers in all countries. C. neither producers nor consumers. D. consumers in some countries but hurts consumers in other countries.
In order to practice any form of price discrimination, a monopoly must be able to
a. identify the maximum price that each customer is willing to pay. b. separate its customers into distinct groups. c. prevent resale of its product. d. establish a legal barrier to entry.
In the presence of positive production externalities, a monopolist might produce the efficient output level.
Answer the following statement true (T) or false (F)
Explain the underlying assumptions of the price leadership model. What conclusions can be made about the price charged and the output produced in an industry that has a dominant price leader?
What will be an ideal response?