A monopolistically competitive industry is like a purely competitive industry in that
A. each industry produces a standardized product.
B. nonprice competition is a feature in both industries.
C. firms in both industries face a horizontal demand curve.
D. neither industry has significant barriers to entry.
Answer: D
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Assume that the ratio of excess reserves to demand deposits is 0, and the ratio of currency to demand deposits is .2. If the reserve requirement on demand deposits is .3 and there is no reserve requirement on savings accounts, the M1 multiplier is
A) 5.5. B) 4. C) 2.5. D) 2.4.
How does moral hazard contribute to high bank leverage?
What will be an ideal response?
One of the reasons why firms pollute air and water is that
a. air and water are often not priced. b. managers desire to pollute. c. air and water have no value to society. d. managers are profit maximizers.
A competitive car wash currently hires 4 workers, who together can wash 80 cars per day. The market price of car washes is $5 per wash, and the price of workers is $60 per day. The car wash should hire a fifth worker if it would increase total production to at least:
A. 92 cars per day. B. 100 cars per day. C. 104 cars per day. D. 110 cars per day.