Economists agree that a monopolistically competitive market structure
A) lowers consumer utility because consumers pay a price higher than the marginal cost of production.
B) is detrimental to society because it leads to a waste of scarce resources.
C) benefits consumers because firms produce products that appeal to a wide range of consumer tastes.
D) can eliminate any excess capacity if all firms in the industry devote more funds to differentiating their products.
Answer: C
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The above figure shows the marginal benefits and marginal costs of a college education. What is the amount of the external benefit in the figure?
A) $0 B) $5,000 C) $10,000 D) $15,000
Refer to Table 12-3. What will Arnie's output be and how much profit will he earn if the market price of basketballs is $5.00?
A) Q = 0; profit = -$10.00 B) Q = 3; profit = -$7.50 C) Q = 1; profit = -$10. D) Price and profit cannot be determined from the information given.
Suppose we were analyzing the pound per Swiss franc foreign exchange market. If Switzerland's price level rise relative to England and nothing else changes, then the: a. The supply of Swiss francs in the foreign exchange market falls, and the demand for Swiss francs in the foreign exchange market rises, causing an appreciation of the Swiss franc
b. The supply of Swiss francs in the foreign exchange market rises, and the demand for Swiss francs in the foreign exchange market falls, causing an appreciation of the Swiss franc. c. The supply of Swiss francs in the foreign exchange market rises, and the demand for Swiss francs in the foreign exchange market rises, causing an uncertain change in the value of the Swiss franc. d. The supply of Swiss francs in the foreign exchange market rises, and the demand for Swiss francs in the foreign exchange market falls, causing a depreciation of the Swiss franc. e. Neither supply nor demand in the foreign exchange market change because relative international prices influence trade flows and not the exchange rate.
Economic models are
A) always based on laboratory methods similar to natural sciences. B) a simplified representations of the real world. C) used only in conducting experiments about how people behave. D) used in macroeconomic analysis but not in microeconomic analysis.