Who will lose more customers by raising their price, a firm operating in a perfectly competitive market or a monopolistic competitor? Explain
The firm operating in a perfectly competitive market will lose more customers. In fact, it will lose all of its
customers, because all firms in the industry produce identical output, and customers will not buy from
firms that charge above-market prices. A monopolistic competitor, on the other hand, finds that some
customers will remain loyal as it raises its price, because the firm's output is unique, even though it has
close substitutes.
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What is a currency board?
a. A fixed exchange rate that, by law, exchanges domestic currency for a specified foreign currency at a fixed exchange rate. b. A floating exchange rate. c. A managed floating exchange-rate policy that the government adjusts periodically according to some economic indicator. d. A laissez-faire exchange-rate policy. e. An interventionist exchange-rate policy.
Over the last several years, the earnings gap between workers with college degrees and workers with high school degrees has
a. remained roughly constant for both men and women. b. widened for both men and women. c. widened for men and narrowed for women. d. narrowed for men and widened for women.
Pure public goods involve positive externalities.
A. True B. False C. Uncertain
If the dollar appreciates:
A. imports to the United States become more expensive for foreigners B. exports from the United States become more expensive for foreigners C. imports become more expensive for U.S. citizens. D. exports from the United States become cheaper