Monopolistic competition is characterized by excess capacity because:
A. Firms are always profitable in the long run
B. Firms charge a price that is greater than marginal cost
C. Firms produce at an output level less than the least-cost output
D. The demand for a product is perfectly elastic in this type of industry
C. Firms produce at an output level less than the least-cost output
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Refer to the figure above. Which of the following is likely to happen if a price control of $40 is imposed?
A) There will be a surplus of 10 units in the market. B) There will be a shortage of 10 units in the market. C) There will be a surplus of 20 units in the market. D) There will be a shortage of 20 units in the market.
When two variables have a negative correlation,
a. when the x-variable decreases, the y-variable decreases. b. when the x-variable decreases, the y-variable increases. c. when the x-variable increases, the y-variable increases. d. More than one of the above is correct.
Which of the following is an example of a compensating differential?
a. Two workers with different undergraduate majors earn different salaries. b. Two workers with different years of experience earn different salaries. c. Two workers whose jobs entail different risks earn different salaries. d. Two workers with different levels of personal attractiveness earn different salaries.
Which firm is most likely to be able to engage in price discrimination?
a. a small retailer selling common household goods b. one of only three firms in a specialized industry c. a fast food chain with many competitive rivals d. a business that just entered a market and has little customer data