Competitive firms frequently use advertising to differentiate their product from their competitors' products
a. True
b. False
Indicate whether the statement is true or false
False
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We expect firms with ________ to sell marketable pollution permits to firms with ________.
A. low abatement costs; high abatement costs B. high abatement costs; low abatement costs C. high price goods; low price goods D. high production capacity; low production capacity
Is the developing world moving toward centralized planning or free markets? Justify your answer
What will be an ideal response?
Suppose a company increases production from a point where marginal cost equals average total cost to a point where marginal revenue and marginal cost are equal. Is it a good idea for the company to do this? Why? a. No; average total costs have increased which means the company is not minimizing losses
b. Yes; because average variable costs are always less than average total costs. c. No; because the marginal cost of producing the last unit is the same as the marginal revenue. d. Yes; even though the previous level of output had minimized the average total cost, there was still profit to be earned by producing additional units. e. No; the previous level of output was the most efficient because it had the lowest average total cost.
According to the excess capacity theorem, if every firm under monopolistic competition expanded its output,
a. cost per unit of output would rise. b. social benefits would increase. c. cost per unit of output would decrease. d. MC and AC would remain unchanged.