Economists have long debated whether there is a significant loss of well-being to society in markets that are monopolistically competitive rather than perfectly competitive
Which of the following offers the best reason why some economists believe that monopolistically competitive markets are less efficient than perfectly competitive markets?
A) In contrast to perfectly competitive markets, firms in monopolistically competitive markets can charge a price greater than average total cost in the short run.
B) In contrast to perfectly competitive markets, firms in monopolistically competitive markets do not produce where price equals average total cost in long-run equilibrium.
C) In contrast to perfectly competitive markets, neither allocative efficiency nor productive efficiency are achieved in monopolistically competitive markets.
D) In contrast to perfectly competitive markets, firms in monopolistically competitive markets earn economic profits in long-run equilibrium.
C
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How are the following events likely to affect an economy's production possibilities curve?
a. An increase in the working population of the economy b. The import of better production technology c. A natural disaster that destroys some of the economy's resources d. Emigration of workers to other countries
The only goods you consume are pizza and soda. Both are normal goods. You consider pizza and soda to be substitutes. Which of the following will lead you to eat more pizza?
A) The price of a pizza falls. B) The price of a soda falls. C) The price of a soda rises. D) Both answers A and C are correct.
Suppose that opportunity costs are constant and that Fred can either bake a maximum of six pies or three cakes in a day. Ethel can either produce a maximum of eight pies or two cakes in a day. Fred's opportunity cost to produce one cake is
A) one-half pie. B) two pies. C) six pies. D) four pies.
"Owners of firms in young industries should be willing to incur temporary losses if they believe that those firms will be profitable in the long run.". This observation helps to explain why many economists are skeptical about the
a. national-security argument. b. infant-industry argument. c. unfair-competition argument. d. jobs argument.