Monopolistic competition is an
a. inefficient market structure because there is deadweight loss.
b. inefficient market structure because price exceeds marginal cost.
c. efficient market structure because free entry drives long-run profits to zero.
d. Both a and b are correct.
d
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A firm operating in competitive input and output markets purchases new technology, which shifts the total product schedule from A to B, as shown in the data below.Schedule ASchedule BNumber of WorkersTotal ProductNumber of WorkersTotal Product130135240247348357454465559571663676At the market wage rate of $30 and product price of $5, this firm will
A. increase the number of laborers hired from 4 to 6. B. increase the number of laborers hired from 4 to 5. C. decrease the number of laborers hired from 4 to 3. D. hire the same number of laborers in both situations.
Economic efficiency in a free market occurs when
A) producer surplus is maximized. B) price is as low as possible. C) consumer surplus is maximized. D) the sum of consumer surplus and producer surplus is maximized.
The production of agricultural products such as wheat or corn would best be described by which market model?
A. Pure competition B. Pure monopoly C. Monopolistic competition D. Oligopoly
The U.S. legal system mainly engages in activities that
A. involve defining and protecting property rights. B. focus on producing public goods. C. are dedicated to producing private goods. D. focus on income redistribution.