In monopolistic competition if there is profit, there is:
A. a signal for new firms to enter.
B. a motive for existing firms to increase prices.
C. proof that advertising works.
D. a motive for existing firms to decrease prices.
Answer: A
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When a nation removes restrictions on imported products we will see
A. an increase in consumer surplus and a decrease in producer surplus. B. a decrease in consumer surplus and an increase in producer surplus. C. an increase in consumer surplus and an increase in producer surplus. D. a decrease in consumer surplus and an decrease in producer surplus.
Explain the endowment effect
What will be an ideal response?
Under the new Constitution in 1789, the states gained the sovereign power to
(a) levy taxes. (b) power and issue money. (c) "regulate" the value of money. (d) create corporations by special franchise.
Kevin's Golf-a-Rama sells golf balls in a perfectly competitive market. At its current level of golf ball production, Kevin has marginal costs equal to $1, and AVC is rising. If the market price of golf balls is $2, Kevin should:
A. decrease the level of golf ball production. B. continue producing the current level of production. C. increase the production of golf balls. D. shut down and produce no golf balls.