In a monopolistically competitive market with Dixit-Stiglitz preferences, equilibrium price falls as the goods in the differentiated product market become more substitutable.
Answer the following statement true (T) or false (F)
True
Rationale: Price is equal to marginal cost divided by (negative) rho -- with goods becoming more substitutable as rho approaches -1.
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A price-discriminating monopoly is a monopoly that
A) sells its output at a single price to all of its customers. B) sells different units of a good or service at different prices. C) has control over the resources used to produce the product. D) has a license to sell the product. E) illegally charges different customers different prices for the good it produces.
Suppose that Brazil and Peru exchange coffee and leather. Brazil can produce both coffee and leather more efficiently than Peru, but Brazil can produce coffee more efficiently than leather. Comparative advantage states that:
A) Brazil should produce both coffee and leather and not trade. B) Brazil should produce coffee, Peru should produce leather, and both countries should trade. C) Brazil should produce leather, Peru should produce coffee, and both countries should trade. D) Peru should produce both coffee and leather and not trade.
Which statement is true?
A. This firm is in the short run.
B. This firm is in the long run.
C. This firm may be in either the short run or the long run.
D. It cannot be determined if this firm is in the short run or the long run.
When the price level is below the level at which the aggregate demand curve crosses the long run aggregate supply curve
A. there will be pressures that will lead to a shift of either the aggregate demand or the long run aggregate supply curves. B. total planned real expenditure will be lower than actual real GDP, and the price level will increase. C. total planned real expenditures will exceed actual real GDP, and the price level will increase. D. there will be no price level change.