What happens to the demand curves of the existing firms when new firms enter into a monopolistic competitive market?
What will be an ideal response?
The demand curves faced by the existing firms in a monopolistic competition shift to the left and become flatter when new firms enter the industry. This is because new firms take a portion of the market.
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Describe the channels through which an open market sale of bonds by the Fed affects output in a closed economy
What will be an ideal response?
Suppose Johnny Stroller sells 12, 25, and 75 year-old scotch in under black, red, and blue labels. Suppose the storage costs are zero and the initial production costs are the same. What is the implied (approximate) interest rate if black sells for $12, red for $16 and blue for $44
a. 2 b. 5 c. 8 d. 10
Who is more likely to drive carelessly, Camila in her 1980 Ford with bad brakes or Samantha, who has a 2005 BMW with all the most recent safety options?
Wes works as a delivery man and can work as many hours as he likes for $12 an hour. He typically works 40 hours a week. Recently, his pay has been cut, and Wes decides to work:
A. less hours, because the income effect dominates his labor supply decision. B. the same amount, because the price effect dominates his labor supply decision. C. more hours, because the price effect dominates his labor supply decision. D. more hours, because the income effect dominates his labor supply decision.