Explain why the following graph is likely to represent the long-run equilibrium for a representative firm in monopolistic competition. What will be the product price, output, and amount of economic profit?
What will be an ideal response?
In long-run equilibrium the monopolistic ally competitive firm will set price where MR=MC, so in this case the product price will be set at A and the output level will be D. The firm, however, will not earn an economic profit, but earn only a normal profit because the price is equal to where ATC is tangent to the demand curve. At the price, there will be no incentive for firms to enter or exit the industry.
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Any event that decreases the value of the marginal product of labor will:
A. decrease labor demand. B. decrease labor supply. C. increase labor demand. D. increase labor supply.
A natural monopoly is defined as an industry in which one firm
a. can produce the entire industry output at a lower average cost than a larger number of firms could. b. can produce the entire industry output at a lower marginal cost than a larger number of firms could. c. is very large relative to other firms that could enter the industry. d. can earn higher profits if it is the only firm in the industry rather than if other firms also enter the industry.
In December of 2007, with an unemployment rate of 5.0 percent, most economists believed this was above the natural rate
a. True b. False Indicate whether the statement is true or false
The money rate of interest is the
a. real rate of interest minus the inflationary premium. b. real rate of interest plus the inflationary premium. c. real rate of interest divided by the inflationary premium. d. inflationary premium minus the real interest rate.