The major similarity between monopolistic competition and perfect competition is
A) the shape of the demand curve.
B) that both assume many buyers and sellers.
C) price equals marginal revenue in each.
D) both assume products are differentiated.
B
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If demand for clean water is specified as P = 140 – 2Q, and the market price is $40, then consumer surplus at that price level is
a. $2500 b. $3000 c. $1600 d. $50
Pizza and hamburgers are substitutes for consumers. A fall in the price of a pizza ________ the price of a hamburger and ________ the quantity of hamburgers
A) raises; increases B) raises; decreases C) lowers; increases D) lowers; decreases
Sam's production possibilities frontier has good A on the horizontal axis and good B on the vertical axis. If Sam is producing at a point inside his frontier, then he
A) can increase production of both goods with no increase in resources. B) is fully using all his resources. C) values good A more than good B. D) values good B more than good A.
Which of the following statements is true?
A) A decrease in supply causes equilibrium price to rise; the increase in price then results in a decrease in quantity demanded. B) If demand increases and supply decreases one cannot determine if equilibrium price will increase or decrease without knowing which change is greater. C) An increase in demand causes an increase in equilibrium price; the increase in price causes supply to increase. D) If both demand and supply decrease, there must be a decrease in equilibrium price; equilibrium quantity may either increase or decrease.