"A firm in monopolistic competition maximizes its profit by producing where its price is equal to its marginal cost." Is the previous statement correct or incorrect?
What will be an ideal response?
The statement is incorrect. A firm in monopolistic competition maximizes its profit by producing where its marginal revenue equals its marginal cost. Because the marginal revenue is less than the price for a firm in monopolistic competition, it definitely is not the case that the firm produces where its price equals its marginal cost!
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The larger a country is relative to the rest of the world, the less likely it is to be able to produce a net benefit for its citizens by imposing an import tariff.
Answer the following statement true (T) or false (F)
If marijuana were legalized, it is likely that there would be an increase in the supply of marijuana. Those in favor of legalizing marijuana argue that this would generate less revenue to illegal suppliers. The legalize marijuana proponents must believe the: a. demand for marijuana is elastic
b. demand for marijuana is inelastic. c. demand for for marijuana is unit elastic. d. none of the above.
According to the purchasing power parity theory, which of the following is most likely to affect exchange rates?
a. differences in inflation rates b. differences in interest rates c. differences in income levels d. differences in real GDP growth rates
An economy that has a private sector and a public sector is called a ______________.
Fill in the blank(s) with the appropriate word(s).