In the long run, a monopolistic competitor:
a. earns a normal rate of return
b. sells a level of output at which marginal revenue is less than price.
c. sells a level of output at which marginal revenue equals marginal cost.
d. is characterized by all of the above.
d
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When there is a recessionary gap, inflation will ________, in response to which the Federal Reserve will ________ real interest rates, and output will ________.
A. decline; lower; decline B. increase; raise; decline C. decline; lower; expand D. decline; raise; decline
The above figure shows the marginal social benefit, marginal private cost and marginal social cost of producing steel. If the market is competitive and unregulated, how much steel will be produced?
A) 0 tons B) 2 tons C) 4 tons D) 8 tons
Is wage discrimination more likely in competitive or monopolistic markets?
What will be an ideal response?
If the Deutsche Mark and the British pound exchange rates are fixed, and the German Bundesbank conducts a tight monetary policy to counteract an expansion in German GDP, interest rates in Germany will ____, which will force Britain to ______.
A) fall; default B) rise; raise its rates to maintain interest parity and the fixed exchange rate C) fall; sell gold D) rise; lower its rates to maintain interest parity and the fixed exchange rate