If firms in a monopolistically competitive market are incurring economic losses, which of the following statements describes the changes that occur as the market adjusts to the long-run equilibrium?
a. Each existing firm's demand curve shifts to the right.
b. More firms exit the market.
c. Each firm eliminates its excess capacity.
d. Both a and b are correct.
d
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During the recession of 2007-2009 in the United States, ________ relative to potential GDP
A) business fixed investment spending rose and net export spending declined B) federal government purchases rose and changes in business inventories declined C) consumption spending rose and residential construction spending declined D) net export spending rose and consumption spending declined
In order to maximize its profits, a price-taking firm should produce the level of output at which:
A) total revenue = total cost. B) average revenue = average cost. C) variable revenue = variable cost. D) marginal revenue = marginal cost.
The most basic concept of economics is
A) self-interest. B) scarcity. C) demand. D) rationality.
All of the following can create an oligopolistic structure EXCEPT
A) low barriers to entry. B) economies of scale. C) government licensing rules. D) mergers.