In the long run, monopolistically competitive firms can make an economic profit because of product differentiation
Indicate whether the statement is true or false
FALSE
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According to the real-balance effect, an increase in the price level will
A) leave total planned real expenditures unchanged since the price level of all goods has increased. B) decrease total planned real expenditures because of an increase in interest rates. C) lead to a corresponding increase in total planned real expenditures since businesses are now earning higher profits. D) decrease total planned real expenditures as a result of a decrease in the real value of money balances.
The Tragedy of the Commons describes
a. government regulation that is necessary to combat externalities. b. overuse of a common resource relative to its economically efficient use. c. the nonrivalry feature of a common resource. d. an effective cost-benefit analysis.
Which of the following will increase interest rates in the short run?
A. An decrease in reserve requirements B. Open-market sales by the Fed C. A decrease in real GDP D. A decrease in the price level
The minimum possible short-run average costs are equal to long-run average costs when
A. the plant is producing at its short-run minimum point. B. production is at any point on the LAC curve. C. the long-run curve is at a minimum point. D. short-run and long-run costs are declining.