In the long run, a monopolistically competitive firm ________ make an economic profit and a monopoly ________ make an economic profit
A) can; can
B) can; cannot
C) cannot; can
D) cannot; cannot
C
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An insurance agent rents a building and has a three-year lease. An increase in the rent for the building increases the agent's
A) total cost and average variable cost. B) total variable cost and average variable cost. C) total fixed cost and total variable cost. D) total fixed cost and average fixed cost. E) total variable cost and total cost.
Calvin buys newspapers and delivers them (by bike) to his customers' houses while Hobbes sells lemonade at his lemonade stand. One day they compare notes and find that Calvin, after paying for the newspapers and the maintenance on his bike, clears $5 per hour while Hobbes, after paying for the lemonade ingredients and upkeep of his lemonade stand, clears $4.50 per hour. The newspaper and lemonade businesses are the only possible trades for Calvin and Hobbes. a. If Calvin and Hobbes are identical, how much economic profit (per hour) is each making? b. Suppose Hobbes is slower on his bike than Calvin -- and he could only deliver half as many newspapers per hour. What's his economic profit in the lemonade business?
What will be an ideal response?
Rank the components of aggregate demand by their sensitivity to changes in the real interest rate. Start with the most sensitive to the least sensitive.
What will be an ideal response?
Suppose that a monopolistically competitive market is in its long-run equilibrium. If the market demand curve shifts to the left due to a recession:
A. the number of firms in the market decreases in the short run. B. some firms may earn negative profits in the short run. C. firms' average costs of production decreases as they decrease output levels in the short run. D. None of these