Compared to a purely competitive firm in long-run equilibrium, the monopolistic competitor has a:
A. Lower price and lower output
B. Higher price and lower output
C. Higher price and higher output
D. Price and output that may be higher or lower
B. Higher price and lower output
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A unit-elastic demand curve never touches or crosses either of the axes. Why?
What will be an ideal response?
An increase in the interest rate will cause
A) planned investment spending to increase. B) planned investment spending to decrease. C) the investment function to shift out. D) the investment function to shift in.
Shortages are the same thing as excess:
A.) Supply caused by price floors. B.) Supply caused by price ceilings. C.) Demand caused by price floors. D.) Demand caused by price ceilings.
If government spending increases, which causes producers to hire more workers, and as a result households have more income to spend, which causes aggregate demand to increase even more, this is known as the:
A. Magnifying process. B. Multiplier process. C. Saving effect. D. Fiscal effect.