What happens to a monopolistically competitive firm that begins to charge an excessive price for its product?
a. The firm will go out of business.
b. Consumers will substitute a rival's product.
c. Consumers will boycott the product.
d. The government will regulate the price.
Answer: Consumers will substitute a rival's product.
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For a single-price monopolist that is maximizing profit, the price is
A) less than marginal revenue. B) equal to marginal revenue. C) equal to marginal cost. D) greater than marginal cost.
Hotspur Incorporated, a manufacturer of microwaves, is a price taker in both the input and output markets. To maximize its profit, Hotspur will hire labor up to the point where
A) the marginal revenue product of labor equals the wage rate. B) the marginal revenue product of labor equals the output price. C) the marginal product of labor is no longer positive. D) all economies of scale have been exhausted.
The required-reserve ratio is equal to:
A. A commercial bank's checkable-deposit liabilities divided by its required reserves B. A commercial bank's required reserves divided by its checkable-deposit liabilities C. A commercial bank's checkable-deposit liabilities multiplied by its excess reserves D. A commercial bank's excess reserves divided by its required reserves