How is a monopolistically competitive industry like perfect competition? How is it like monopoly?
What will be an ideal response?
Monopolistic competition is like perfect competition in that there are many firms and no barriers to entry (and thus long-run economic profits will be zero). It is like monopoly in that firms sell products that are not perfect substitutes for each other, and thus firms have some market power, and prices will be above marginal cost.
You might also like to view...
When taxes paid by a check are deposited in tax and loan accounts,
A) bank reserves and the money supply are unaffected. B) bank reserves fall but the money supply is unaffected. C) bank reserves are unaffected but the money supply falls. D) bank reserves and the money supply fall.
Why might it be a good economic decision for a person such as Oprah Winfrey or Mark Zuckerberg to drop out of college? Give an economic justification for such a decision
Please provide the best answer for the statement.
In Canada, when new demand deposits are created through loans made to Canadians who borrow in order to invest in Canada
a. the Canadian money supply contracts b. excess reserves in Canadian banks are destroyed c. the money supply in Canada remains unchanged but the interest rate decreases favoring the Canadian investor d. the money supply in Canada expands e. the Canadian legal reserve requirement declines
An increase in the real interest rate will
a. lead to an increase in the expected inflation rate. b. increase the real cost of purchasing goods and services in the current period relative to future periods. c. encourage borrowers to demand a larger quantity of funds. d. reduce the quantity of funds supplied to the loanable funds market.