Consider a perfectly competitive market. What happens to profit-maximizing output of the representative firm when entry occurs?
a. output will rise
b. output will fall
c. output will not change
Answer: b. output will fall
You might also like to view...
When the economy is on the flatter part of the short run aggregate supply curve, efforts to change inflation with monetary policy will be ____ successful and efforts to stimulate the economy will be ____ successful
a. More; more b. More; less c. Less; more d. Less; less
Which of the following ideas is associated with mainstream economics?
A. Monetary policy rules are desirable. B. Capitalist economies tend to be stable. C. Crowding-out of investment makes fiscal policy ineffective. D. Fiscal policy is a useful stabilization tool.
Which of the following types of sampling always causes bias or inconsistency in the ordinary least squares estimators?
A. Random sampling B. Exogenous sampling C. Endogenous sampling D. Stratified sampling
To explain the existence of excess capacity, Keynes argued that
A. prices and wages are inflexible in the downward direction. B. the long run average cost curve should not occur at the full employment level. C. prices and wages are flexible, and eventually markets would go back to equilibrium. D. the aggregate demand curve can be manipulated by advertising.