The product-variety externality and the business-stealing externality are both spillover benefits of new firms entering a monopolistically competitive market
a. True
b. False
Indicate whether the statement is true or false
False
You might also like to view...
By the time Paul Volcker took office as the new Federal Reserve chairman in 1979, both the inflation and unemployment rates were higher than during most of the 1950s, 60s and early 70s
The Federal Reserve implemented an autonomous tightening of monetary policy that resulted in the famous Volker Disinflation which was successful in bringing both problems under control. What would have been a likely result had Mr. Volker conducted an expansionary monetary policy instead? A) Inflation would have been made worse right away but unemployment would have been permanently lowered. B) In the long run the unemployment problem would not have been fixed and the inflation problem would have been made much worse. C) In the short-run both inflation and unemployment would have declined but in the long-run unemployment would have been worse than before the Fed's action. D) In the short-run both inflation and unemployment would have been made worse but both would have been lowered in the long-run. E) none of the above
People living in different countries can benefit from international trade because
a. different countries use different currencies. b. trade makes it possible for the residents of different countries to specialize in the production of those things they do best. c. trade makes it possible for people to acquire goods from foreigners cheaper than they could be produced domestically. d. both b and c are correct. e. all of the above are correct.
For a firm, strategic interactions with other firms in the market become more important as the number of firms in the market becomes larger
a. True b. False Indicate whether the statement is true or false
Suppose the price of a liter of soda is $2. If Sara is willing to pay $3 for that liter of soda, her consumer surplus when she buys the soda is:
A. $0. B. $1. C. $2. D. $3.