A firm with substantial market power must be in a ____________ industry
a. monopoly or oligopoly
b. perfectly competitive
c. monopolistically competitive
d. perfectly competitive or monopolistically competitive
e. perfectly competitive or a monopoly
A
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What is the Principal of Optimization at the Margin? Explain with an example
What will be an ideal response?
If the MPC = 3/4, an increase in government purchases of $40 billion will ultimately lead to:
a. a $160 billion increase in aggregate demand. b. a $40 billion increase in aggregate demand. c. a $30 billion increase in aggregate demand. d. a $30 billion decrease in aggregate demand.
Contractionary monetary policy in a flexible exchange rate regime will cause
A) a shift of the IP curve. B) a depreciation of the domestic currency. C) an increase in E. D) no change in E.
Normally in the United States the relationship between nominal and real GDP for a given year is
A) real GDP is greater than nominal GDP because of price increases. B) nominal GDP is greater than real GDP because of price increases. C) nominal GDP equals real GDP. D) nominal GDP is greater than real GDP because of price decreases.