Which of the following characterizes monopolistic competition?
A. Marginal cost pricing.
B. Zero long-run profit.
C. Price leadership.
D. Retaliation.
Answer: B
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What will be an ideal response?
Suppose that the MPC out of disposable income was 0.8 and the tax function for a given economy was T = – 30 + 0.25Y
An increase in the intercept of the tax function of 10 units (from – 30 to – 20) would cause equilibrium income in the simple Keynesian model to fall by a. -20 units. b. 10 units. c. 20 units. d. 40 units.
If the entire Social Security payroll tax were paid the employees _____
a. firms would be better off b. more individuals would be self-employed c. the nominal wage paid by employers would increase d. the employees after-tax wage would fall
If a monopolist is forced to set price equal to average total cost, economic profit
a. will be negative, and the monopolist may go out of business b. will be zero c. will be positive d. will be negative, and the firm will stay in business if there are significant fixed costs e. may be positive, negative, or zero