When monopolistically competitive firms earn ________ profits, other firms ________ the industry in the long run.
A. negative economic; exit
B. normal; exit
C. positive economic; exit
D. normal; enter
Answer: A
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A firm that can effectively price discriminate will charge a higher price to
A) buyers who belong to the largest market segment. B) buyers who are members of the smallest market segment. C) customers who have the more elastic demand for the product. D) customers who have the more inelastic demand for the product.
Suppose that Brazil is capital abundant and Chile is natural resource abundant. If timber is natural resource intensive and computers are capital intensive, then
A) Chile will produce more computers after trade begins with Brazil. B) Brazil will produce more timber after trade begins with Chile. C) Chile will produce more timber after trade begins with Brazil. D) Brazil will completely specialize in computers once trade begins with Chile.
In the monetary small open-economy model with a fixed exchange rate, the domestic
A) government loses control over the level of domestic government spending. B) government loses control over the level of domestic taxes. C) government loses control over the level of domestic government spending and domestic taxes. D) central bank loses control over the domestic stock of money.
The size of the spending multiplier depends on the marginal propensity to consume (MPC)
a. True b. False Indicate whether the statement is true or false