Firms have incentive to enter a monopolistically competitive market if:
A. positive profits are being earned and the price is below MC.
B. zero profits are being made and they can duplicate the product exactly.
C. positive profits are being earned and they can create a similar product.
D. zero profits are being made and they can create a similar product.
C. positive profits are being earned and they can create a similar product.
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Generating electricity creates air pollution. This industry, if left unregulated, will produce at an inefficient market equilibrium because
A) there is a deadweight loss. B) supply is not equal to demand. C) too little output is produced. D) the marginal social benefit is greater than the marginal social cost.
If the required reserve ratio is 0.2, the demand deposit multiplier is
a. 0.2 b. 0.8 c. 1.25 d. 5.0 e. 8.0
Other things the same, which of the following could be a consequence of an appreciation of the U.S. real exchange rate?
a. John, a French citizen, decides that Iowa pork is now relatively less expensive and orders more for his restaurant. b. Nick, a U.S. citizen, decides that the trip to Nepal he's been thinking about is now affordable. c. Roberta, a U.S. citizen, decides to import fewer windshield wipers for her auto parts company. d. All of the above are correct.
You value your favorite shirt at $110. Someone else values it at $150, and that person is willing to pay you $120 for your shirt. Would selling your shirt to this person for $120 be Pareto efficient?
A. Yes, because even though you gain from the trade and he loses, there is the potential for you to compensate him for his loss. B. No, the person paid you $120 for the shirt so his net benefit was $30, while your net benefit was $10. For this change to be Pareto efficient, each of you should have the same net benefit. C. Yes, because both of you are better off as a result of the trade. D. No, because you did not receive the maximum amount the other person would have been willing to pay for the shirt.