In perfect competition, technological advances will allow economic profits for
a. all firms.
b. only the firm developing the new technology.
c. early adopters.
d. none of the firms, as the advance will be immediately adopted by all of them.
C
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Characteristics of a perfectly competitive market include:
A. the presence of transaction costs. B. homogenous products. C. few sellers, each with a large market share. D. All of these are characteristics of a perfectly competitive market.
Answer the following statements true (T) or false (F)
1. The supply of money is inversely related to the level of total income and output. 2. The transactions approach to the equation of exchange can be expressed as MV = PQ. 3. The velocity of money is equal to PQ/M. 4. If M equals $40, V equals 16, and Q equals 16, then P equals $40. 5. If M triples, V remains the same, and Q doubles, then P rises.
Which of the following does the law of demand specifically imply?
a. If the product price increases, quantity demanded will decrease. b. If consumer income increases, quantity demanded will increase. c. If the product price increases, quantity demanded will increase. d. If consumer income increases, quantity demanded will decrease. e. If supply increases, demand will increase.
Figure 11.6Referring to Figure 11.6, how much economic profit does the monopolistically competitive firm earn in long-run equilibrium?
What will be an ideal response?