In both a monopolistically competitive market and a pure monopoly market, firms
A. can make long-run profits.
B. advertise extensively.
C. set price greater than marginal cost.
D. are protected by entry barriers.
Answer: C
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The term prisoners' dilemma
a. refers only to situations where prisoners' must confess on one another. b. is in agreement with Adam Smith's invisible hand idea. c. represents situations where people do not act in their own self interest. d. can be applied to show why cartels are difficult to maintain.
The above figure shows a perfectly competitive firm. If the market price is more than $20 per unit, the firm
A) will definitely shut down to minimize its losses. B) will stay open to produce and will make zero economic profit. C) will stay open to produce and will incur an economic loss. D) will stay open to produce and will make an economic profit. E) might shut down but more information is needed about the fixed cost.
If potential GDP for the third quarter of 2012 = $20.4 billion, and the deviation from potential GDP for the third quarter of 2012 = -$1.6 billion, then the output gap was
A) -7.8%. B) -12.8%. C) -18.8%. D) -32.6%.
If the Palace Cinema can sell 200 tickets at $4 and 300 tickets at $3, our best estimate of the marginal revenue from sale of the 250th ticket is
A) $4. B) $3.50. C) $3. D) $1.