A monopolistic competition is a market structure where:
a. a large number of firms compete in a market and sell non-identical products
b. a small number of firms, perhaps just two or three, sell all of the output in a market.
c. a large number of firms compete in a market and sell identical products.
d. a firm produces and sells all of the output—for which there are no close substitutes—in the market.
a
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In the mid-to-late 1990s, changes in the health care industry, substantially reduced health care costs relative to other goods and services. Which of the following is an appropriate description of the mechanism behind this supply shock?
A) The AS curve likely shifted to the right which likely explains the short-run fall in unemployment. B) The ensuing increase in productive capacity led to the rightward shift of the LRAS which is a likely explanation for the protracted decline in the unemployment rate of the 1990s. C) A positive output gap would have resulted in the short-run but it was eventually closed by a rightward shift of the LRAS which is a likely explanation for the protracted decline in the inflation rate of the 1990s. D) all of the above E) none of the above
The Commons Problem arises because
A) firms don't maximize profits. B) social and private incentives are not aligned and property rights are missing. C) social cost equals private cost and property rights are missing. D) social benefit equals private benefit and property rights are missing.
Which of the following factors would be most likely to encourage investment and capital formation in a less-developed nation?
a. High and variable rates of inflation. b. Tariffs and quotas that restrict international trade. c. A legal system that provides for secure property rights and evenhanded enforcement of contracts. d. High marginal tax rates.
Suppose you manage a baseball stadium. To pay the salary for a star player, you would like to increase the total revenue from ticket sales. Should you increase or decrease the price of a ticket to increase revenue? Explain