When a perfectly competitive firm or a monopolistically competitive firm is making zero economic profit,
A. no firms will want to enter or exit.
B. some firms will want to leave.
C. some firms will want to enter.
D. market demand shifts to the left.
Answer: A
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An increase in quantity demanded a. illustrated by a movement downward and to the right along a demand curve. b. illustrated by a movement upward and to the left along a demand curve. c. shifts the demand curve to the left
d. shifts the demand curve to the right.
Mutual interdependence among firms in an oligopoly means that:
a. firms never form a cartel. b. it is difficult to know how firms will react to decisions of rivals. c. no formal agreement is possible among firms. d. firms never practice price leadership.
According to the Taylor rule, if real GDP is 4 percent below potential GDP, the Fed should:
A. lower the federal funds rate by 2 percentage points. B. lower the federal funds rate by 4 percentage points. C. lower the federal funds rate by 8 percentage points. D. do nothing, as the economy will correct itself.
Why does competition lead to lower prices for consumers?
A. Companies do not lower prices for consumers. B. Companies bid down each other to get your business. C. Companies bid against each other to get workers at minimum wage. D. Companies can find cheaper resources.