Refer to the graph shown of a monopolistically competitive firm. The graph shows that:
A. new firms will enter the industry.
B. some existing firms will leave the industry.
C. the price of the product is $90.
D. the industry is in long-run equilibrium.
Answer: B
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Inflation decreases the growth of capital because
i. when the after-tax real interest rate falls, savings decreases. ii. velocity increases when inflation increases. iii. the higher the inflation rate, the higher is the true income tax rate on income from capital. A) i only B) ii only C) iii only D) i and iii E) i, ii, and iii
Over the past 40 years, real GDP per capita has roughly
a. stayed the same. b. tripled. c. increased by 50 percent. d. doubled. e. declined by 50 percent.
If the price of bananas goes down, then the demand for pears will
A. remain constant, assuming bananas and pears are related goods. B. decrease, assuming bananas and pears are substitutes. C. decrease, assuming bananas and pears are complements. D. increase, assuming bananas and pears are substitutes.
The Organization of Petroleum Exporting Countries (OPEC) controls about 75 percent of the world's proven oil reserves. Economists refer to OPEC as a cartel because
A) it is a group of firms that collude to restrict output to increase prices and profits. B) OPEC is a monopoly, but it is located outside of the boundaries of any one country. This is the definition of a cartel. C) this is the term economists use to describe an oligopoly that sells a standardized product, such as oil, rather than a differentiated product, such as automobiles. D) this is the term used for an oligopoly that is controlled by national governments rather than private firms.