In the new Keynesian view a monopolistically competitive firm may fail to increase the price of its product as demand increases because
A) if it does so it will lose all of its customers.
B) the cost to it of changing prices may exceed the benefit of doing so.
C) prices of monopolistically competitive firms are regulated by the federal government and may only be changed with permission.
D) for a monopolistically competitive firm, price is below marginal cost.
B
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Refer to Figure 2-17. One segment of the circular flow diagram in the Figure shows the flow of funds from market F to economic agents G. The funds represent spending on goods and services. What is market F and who are economic agents G?
A) F = factor markets; G = households B) F = factor markets; G = firms C) F = product markets; G = firms D) F = product markets; G = households
Diseconomies of scale refers to when in the long run:
A. an increase in the quantity of output decreases average total cost. B. an increase in the quantity of output increases average total cost. C. average total cost does not depend on the quantity of output. D. None of these is true.
Unlike the situation for a firm in perfect competition, positive economic profit exists for firms in monopolistic competition for both the short run and in the long run.
Answer the following statement true (T) or false (F)
If the interest rate is 10 percent, what is the present value of an asset that yields an annual return of $10,000?
a. $1,000 b. $10,000 c. $1,000,000 d. $100,000 e. not enough information to determine