Evaluate this statement: “A monopolistic ally competitive industry would be more efficient if there were fewer firms.”
What will be an ideal response?
This statement is inaccurate. The inefficiency of a monopolistic ally competitive market results from the fact that firms in the market cannot profitably produce at the output where ATC is minimized. If this were not the case, however, fewer firms would be able to produce the same level of output at a lower price and excess capacity would not result.
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Lisa is spending all of her income on compact discs and downloadable games for her smart phone. She finds that the marginal utility from the last compact disc she buys is 30 and the marginal utility from the last downloadable game is 10
The price of a compact disc is $15 and the price of a downloadable game is $5. Lisa should A) increase her consumption of compact discs. B) increase her consumption of downloadable games. C) not change her consumption of downloadable games and compact discs. D) decrease the price of downloadable games.
The property of diminishing marginal rate of substitution follows from the property that the indifference curves are
A) downward sloping. B) upward sloping. C) bowed in toward the origin. D) bowed out from the origin.
The price of a new textbook increases from $120 to $160, while the price of used copies of the textbook increased from $80 to $100. Other things being equal, we would expect
A) the quantity demanded of the used textbook to increase and the quantity demanded of the new textbook to decrease. B) the quantity demanded of both to fall. C) the demand for the new textbook to increase and the demand for the used textbook to decrease. D) the quantity demanded of the used textbook to decrease and the quantity demanded of the new textbook to increase.
According to classical macroeconomic theory, changes in the money supply change nominal but not real variables
a. True b. False Indicate whether the statement is true or false