In monopolistic competition in the long run, firms
A) make zero economic profit and require more capacity.
B) incur an economic loss and require more capacity.
C) make an economic profit and have excess capacity.
D) make zero economic profit and have excess capacity.
E) make an economic profit and require more capacity.
D
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If product Y is an inferior good, a decrease in consumer incomes will
A. shift the demand curve for product Y to the left. B. make buyers want to buy less of product Y. C. shift the demand curve for product Y to the right. D. not affect the sales of product Y.
The marginal tax rate shows
A) the percentage of income which a typical family pays in tax. B) the average rate of taxation in the economy. C) the deductions which are permitted for child care and medical expenses. D) the extra tax due on an extra dollar of income.
The textbook notes that the last time a major league batter hit .400 was in 1941. This is because:
A. the league imposes harsh penalties for steroid use. B. specialization by pitchers, infielders, and outfielders has made it harder for batters to hit. C. baseball diamonds have become larger. D. the average quality of batters has fallen.
Using Figure 1 above, if the aggregate demand curve shifts from AD1 to AD2 the result in the short run would be:
A. P1 and Y2. B. P3 and Y1. C. P2 and Y2. D. P2 and Y3.