A perfectly competitive market is characterized by a large number of small firms that produce a differentiated product
Indicate whether the statement is true or false
FALSE
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The economy pictured in the figure below has a(n) ________ gap with a short-run equilibrium combination of inflation and output indicated by point ________. 
A. recessionary; B B. recessionary; C C. recessionary; A D. expansionary; A
Starting from long-run equilibrium, a large tax cut will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; higher; higher B. expansionary; higher; potential C. recessionary; higher; potential D. recessionary; lower; lower
Generally, as goods are more broadly defined,
a. demand becomes more price elastic b. demand becomes less price elastic c. total expenditure falls as the price decreases d. the demand curve becomes straighter e. more substitute goods can be identified
Draw a graph of the monopolistic competitor making a profit in the graph provided below.
