The price elasticity of demand for a monopolist's product depends on
A) the number and similarity of substitutes.
B) the ATC of the item it produces.
C) the AVC of the item it produces.
D) the MC of the item it produces.
Answer: A
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According to purchasing power parity, the relationship among the domestic price (P), the foreign price (P ), and the nominal exchange rate (e), can be written as
A) P = e - P . B) P = P - e. C) P = eP . D) P = e/P .
While specialization and exchange were very important to Adam Smith in 1776, they have largely lost their importance in the 21st century
a. True b. False Indicate whether the statement is true or false
Because monopolistically competitive firms produce differentiated products, each firm
a. faces a demand curve that is horizontal. b. faces a demand curve that is vertical. c. has no control over product price. d. has some control over product price.
In a diagram of aggregate demand and supply curves, the GDP gap is measured as the
A. Vertical distance between the equilibrium output and the full-employment output. B. Horizontal distance between the equilibrium output and the full-employment output. C. Horizontal distance between the aggregate demand necessary to achieve full employment and the aggregate demand curve at equilibrium output. D. Vertical distance between the equilibrium price and the price at which the aggregate demand would intersect aggregate supply at full employment.