The excess capacity theorem states that
A. society is worse off with fewer monopolistic competitors.
B. costs of production under monopolistic competition can be lowered by reducing the number of producers.
C. lack of excess capacity leads to shortages during periods of unexpected growth in demand for goods produced by monopolistic competition.
D. there is too much choice in our economy.
Answer: B
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Before the Industrial Revolution, living standards in the world
A. were relatively stagnant for long periods of time. B. were declining because of rapid increases in population. C. were already rising significantly for many decades. D. are not known, for lack of reliable records from that period.
In the United States, estimates of the natural rate of unemployment in recent years have varied between
A) 0 percent and 2 percent. B) 0 percent and 4 percent. C) 5 percent and 6.5 percent. D) 2 percent and 4 percent.
The Chunnel auto tunnel allows motorists to travel between England and France. As an alternative, there is ferry service across the English Channel. What would happen in the market for ferry service if fees for using the Chunnel were increased?
A) The demand for ferry service would increase. B) The demand for ferry service would decrease. C) There would be an upward movement along the demand curve for transits through the Chunnel. D) There would be a downward movement along the demand curve for transits through the Chunnel.
When a monopolist chooses the level of output where marginal cost equals marginal revenue the price:
A. equals average revenue. B. is lower than average revenue. C. equals marginal revenue. D. is lower than marginal revenue.