Monopolistically competitive firms have downward-sloping demand curves. In the long run, monopolistically competitive firms earn zero economic profits. These two characteristics imply that in the long run
A) monopolistically competitive markets achieve productive efficiency.
B) monopolistically competitive markets achieve allocative efficiency.
C) monopolistically competitive firms earn economic profits.
D) monopolistically competitive firms have excess capacity.
Answer: D
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List and explain the three fundamental economic questions that must be answered by all economic systems
What will be an ideal response?
Assume that Chile can produce one pound of coffee or 40 pillows in an hour, and that the United States can produce one pound of coffee or 20 pillows in an hour,
a. the terms of trade should be between 20 and 40 pillows per pound of coffee, and the United States should produce both coffee and pillows b. the terms of trade should be between 20 and 40 pillows per pound of coffee, and Chile should produce pillows c. the terms of trade should be between 20 and 40 pillows per pound of coffee, and Chile should produce coffee d. the terms of trade should exceed 40 pillows per pound of coffee, and Chile should produce coffee e. no trade will occur, since the United States does not have an absolute advantage in producing either good
The equation of exchange is an accounting identity that
A. relates the money supply to nominal GDP. B. equates the demand for money with the supply of money. C. relates the money supply to real GDP. D. accounts use to balance assets and liabilities.
The long run is defined as a time period during which full adjustment can be made to any change in the economic environment. Thus in the long run, all factors of production are variable. Long-run curves are sometimes called planning curves, and the long
run is sometimes called the A) foreseeable future. B) minimum efficient time period. C) non-adjustment period. D) planning horizon.