In the long run, a monopolistically competitive firm will:
a. produce more than a perfectly competitive firm.
b. suffer an economic loss.
c. earn positive economic profit.
d. produce less than a perfectly competitive firm.
d
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Graphically show a firm earning a profit; shade the appropriate profit rectangle. Explain how the profit formula represented by the rectangle is analogous to TR ? TC.
What will be an ideal response?
The consumer price index (CPI):
a. adjusts for changes in product quality. b. includes separate market baskets of goods and services for both base and current years. c. includes only goods and services bought by typical urban consumer. d. uses current year quantities of goods and services.
Fiscal restraint is defined as
A. Tax cuts or spending hikes intended to reduce aggregate demand. B. Tax cuts or spending hikes intended to increase aggregate demand. C. Tax hikes or spending cuts intended to reduce aggregate demand. D. Tax hikes or spending cuts intended to increase aggregate demand.
If, in a competitive market, marginal benefit is less than marginal cost
A) the net benefit to consumers from participating in the market is less than the net benefit to producers. B) the government must force producers to raise prices in order to achieve economic efficiency. C) the output is greater than the equilibrium quantity. D) the output is less than the equilibrium quantity.