Monopolistic competition is similar to perfect competition in that:
A. firms advertise in both cases.
B. both entail the production of differentiated products.
C. output is at minimum average total cost in both.
D. long-run profits tend toward zero in both.
Answer: D
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A fiscal policy action to close a recessionary gap is to:
A. increase taxes. B. decrease the marginal propensity to consume. C. decrease government purchases. D. increase transfer payments.
The inflation experienced in the United States during the 1970s as a result of OPEC oil price increases is an example of: a. demand-pull inflation. b. hyperinflation
c. cost-push inflation. d. cyclical inflation. e. disinflation.
What does consumer surplus refer to?
a. the price a consumer actually pays for a good b. the cost of producing one additional unit of a good c. the difference between what a producer is actually paid for a good and the cost of producing one unit of that good d. the difference between what a consumer is willing and able to pay for an additional unit of a good and what he or she actually pays
Assume there is a decrease in government purchases and exports. Currently there is a recessionary gap, which implies that
A. Desired spending is greater than output. B. Inventories are accumulating. C. Investment is greater than saving. D. Inventories are being depleted.