George always purchases the soda with the lowest price. For George, the cross price elasticity of demand for two brands of soda will be
A) equal to 0.
B) negative.
C) positive.
D) impossible to determine without more information.
Answer: C
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Which of the following statements best describes the price, output, and profit conditions of monopolistic competition?
a. Price will equal marginal cost at the profit-maximizing level of output; profits will be positive in the long-run. b. Price will always equal average variable cost in the short run and either profits or losses may result in the long run. c. Marginal revenue will equal marginal cost at the short run, profit-maximizing level of output; in the long run, economic profit will be zero. d. Marginal revenue will equal average total cost in the short run; long-run economic profits will be zero.
One necessary element of price discrimination is ______.
a. high market power b. ignoring customer willingness to pay c. relative ease in reselling discounted products d. low elasticity of demand
If a monopolistically competitive firm is earning economic profits in the short run:
A. its output will increase in the long run. B. these profits will persist in the long run because of the firm's limited monopoly power. C. price will be driven down to minimum average total cost in the long run. D. these profits will be eliminated in the long run as new firms enter the industry.
When there is an expansionary gap, inflation will ________, in response to which the Federal Reserve will ________ real interest rates, and output will ________.
A. decline; lower; expand B. increase; raise; decline C. decline; lower; decline D. decline; raise; decline