If we were to compare the monopolistically competitive firm's long-run outcome to that of a perfectly competitive one, we would conclude that the monopolistically competitive firm:
A. earns the same profit as a perfectly competitive firm.
B. creates less consumer surplus.
C. produces more output.
D. All of these statements are true.
Answer: B
You might also like to view...
Refer to the above figure. A price ceiling has been set at P1, and a black market has opened. The equilibrium black market price will be
A) below P1. B) between P1 and P3. C) above P3. D) P2.
If the graph shown represents Hanna's budget constraint, and the price of hairbands were to decrease, the slope of Hanna's budget constraint would become:
A. steeper, reflecting the fact that hairbands are now relatively less expensive.
B. flatter, reflecting the fact that hairbands are now relatively more expensive.
C. steeper, reflecting the fact that earrings are now relatively less expensive.
D. flatter, reflecting the fact that earrings are now relatively more expensive.
Explain how the Asian crisis of 1997 began. What precipitated the crisis? Did rescue loans prevent recessions in the crisis countries?
What will be an ideal response?
Suppose the government of South Island fixes the exchange rate of its currency, the Islandia, in terms of the U.S. dollar. Initially the exchange rate is set at $1 per Islandia. Later the government changes the exchange rate to $2 per Islandia. This is an example of a(n):
A. appreciation B. devaluation C. depreciation D. revaluation