The process of entry and exit into a monopolistically competitive market continues until:
A. price is equal to average total cost.
B. long-run equilibrium is reached.
C. profits are zero.
D. All of these statements are true.
Answer: D
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If 1 euro is equal to $1.10, then a bottle of wine selling for $10 U.S. dollars will cost _____ euros.
The primary reason government chooses to regulate a natural monopoly is to
a. promote its eventual nationalization b. control price and output c. control profit d. create competition e. distribute market power more evenly among the firms in the industry
Which of the following statements is true?
A) If current Real GDP is greater than Natural Real GDP, the economy is in a recessionary gap. B) If current Real GDP is less than Natural Real GDP, the economy is in long-run equilibrium. C) Wages are flexible if the economy is self-regulating. D) Wages rise but prices remain constant in long-run equilibrium. E) All economists believe the economy is self-regulating.
Which of the following results in higher inflation and higher unemployment in the short run?
a. a more expansionary monetary policy b. a more contractionary monetary policy c. a decrease in the minimum wage d. an adverse supply shock such as an increase in the price of oil