Long-run equilibrium for a monopolistically competitive firm where economic profits are zero results from:
A. rising marginal costs.
B. a perfectly elastic product demand curve.
C. relatively easy entry.
D. product differentiation and development.
Answer: C
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Your roommate argues that he can think of no better situation than living in a deflationary economy, as prices of goods and services would continuously fall. You disagree and argue that during a deflation, people can be made worse off because
A) the purchasing power of the currency would decrease. B) the value of the real interest rate will drop below the nominal interest rate. C) borrowers will have to pay increasing amounts in real terms over time. D) the purchasing power of people's incomes would increase.
Keynes hypothesized that the transactions component of money demand was primarily determined by the level of
A) interest rates. B) velocity. C) income. D) stock market prices.
Perfectly competitive markets feature relatively high barriers to entry.
Answer the following statement true (T) or false (F)
Refer to the graph below. The movement from __________ to __________ is consistent with a successful advertising campaign that claims wool keeps you warm.
a. Point A; Point B
b. Point A; Point F
c. Point A; Point D
d. Point A; Point H