When firms enter a monopolistically competitive industry, the industry cost curves shift to the right.
Answer the following statement true (T) or false (F)
True
Barriers to entry are low in monopolistic competition. Hence new firms will enter if economic profits are available, driving the industry cost curves to the right and the average price down the market demand curve.
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When nations trade, it:
A. only benefits the stronger nation. B. only benefits the weaker nation. C. can benefit all nations involved. D. can only benefit one nation, but we cannot say whichnation without more information.
If the dollar appreciates, it can be said that
a. foreigners respect the United States more. b. it increases in value within the United States. c. other currencies depreciate. d. it takes more dollars to buy foreign currencies.
How is elasticity related to the revenue from a sales tax?
A. If demand is inelastic, then raising tax rates will decrease tax revenue paid by consumers. This principle works similarly with supply. With elastic supply and demand, increasing taxes will increase quantity supplied and quantity demanded enough to cause an increase in tax revenue. B. If demand is inelastic, then raising tax rates will decrease tax revenue paid by consumers. The elasticity of supply has no effect on taxes because taxes only matter to consumers (who have to pay the taxes). C. If demand is inelastic, then raising tax rates will increase tax revenue paid by consumers. This principle works similarly with supply. With elastic supply and demand, increasing taxes will decrease quantity supplied and quantity demanded enough to cause a decrease in tax revenue. D. If demand is inelastic, then raising tax rates will increase tax revenue paid by consumers. The elasticity of supply has no effect on taxes because taxes only matter to consumers (who have to pay the taxes). References
Suppose when a market has four firms, average economic profit is $1,000 per month. When the market has five firms, the average economic profit is -$50 per month. This suggests that
A) the long-run equilibrium number of firms is between four and five. B) the long-run equilibrium number of firms is four. C) the long-run equilibrium number of firms is five. D) there is no long-run equilibrium in this market as profits can never be zero.