Each firm in a monopolistically competitive market
a. earns both short-run and long-run profits.
b. faces a downward-sloping demand curve.
c. cannot earn economic profit in the short run.
d. sets price equal to marginal cost.
b
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Due to a recession, Hostess Bakeries found that the demand for its products decreased. The demand for products ________ the demand for bakers and ________ the equilibrium wage rate paid to bakers
A) increased; raised B) decreased; raised C) increased; lowered D) decreased; lowered
If you take out a mortgage with a nominal interest rate of 8% and you expect the inflation rate to be 2%, but the actual inflation rate turns out to be 8%, then you end up paying a real interest rate of
A) 0%. B) 1%. C) 2%. D) 6%.
The rail system in Metropolis is a natural monopoly. If the government regulates the system by setting the fare equal to marginal cost, which of the following will be true?
a. Profit will be zero under regulation. b. Only normal profit will be earned under regulation. c. Accounting profit will be zero under regulation. d. Economic loss will occur under regulation. e. Profit will be higher than if the monopoly were unregulated.
Which of the following is true of a perfectly competitive market?
a. If economic profits are earned then the price will fall over time. b. In long-run equilibrium P = MR = SRMC = SRATC = LRAC. c. A constant-cost industry exists when the entry of new firms has no effect on their cost curves. d. All of these.