Answer the following statements true (T) or false (F)
1. If the representative firm in a monopolistic ally competitive industry has an optimal output where P< ATC, the industry will expand in the long run.
2. In the long run, typical firms that are monopolistic ally competitive earn economic profits.
3. Monopolistically competitive firms will achieve the most efficient allocation of society's resources because there are no significant barriers to entry into the industry.
4. Pure competition results in a lower price but identical output level compared to those in monopolistic competition.
5. Monopolistic competition provides the benefit of product variety but at the cost of productive inefficiency.
1. FALSE
2. FALSE
3. FALSE
4. FALSE
5. TRUE
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People who do not work because of physical disability are officially classified as:
a. in the labor force. b. unemployed. c. not in the labor force. d. discouraged worker.
The derived demand curve for loans slopes downward because as interest rates
a. fall, future income becomes less valuable. b. fall, investors develop pessimistic expectations. c. fall, future income becomes more valuable. d. rise, investors become pessimistic.
Senator Dogood is pushing for the construction of a new military base in his state even though, from the standpoint of national security, it is clear that there are better places to locate the new military base. Economic theory would suggest that Senator Dogood is
a. acting irrationally; he must not know that the base would be better located in a different state. b. acting rationally; he realizes that constructing the base in his state will increase his chances of getting reelected. c. acting rationally if the country is currently at war but is acting irrationally if the country is not at war. d. trying to do what is best for the country.
Economic theory suggests that the optimal level of immigration in the United States:
A. is zero. B. occurs where the marginal benefit of the last immigrant equals or just exceeds the marginal cost of the last immigrant. C. occurs where the marginal benefit of the last immigrant equals or just exceeds zero. D. occurs at the level where the difference between the marginal benefit and marginal cost of the last immigrant is maximized.