The marginal revenue curve of a monopolistically competitive firm is
A. downward sloping and below the demand curve.
B. perfectly elastic.
C. downward sloping and above the demand curve.
D. identical to the demand curve as there are many small firms in the market.
Answer: A
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By failing to expand output to the point where marginal benefit equals market price, firms with market power produce less of the good and charge a higher price than would be socially optimal
Indicate whether the statement is true or false
Refer to Figure 2-5. If the economy is currently producing at point W, what is the opportunity cost of moving to point Y?
A) 2 million tons of paper B) 2 million tons of steel C) 14 million tons of steel D) 9 million tons of paper
Individuals with homeowner's insurance tend to be more forgetful about locking their possessions safely before heading out. This is an example of
a. Adverse selection b. Moral hazard c. Screening d. None of the above
According to the adaptive expectations theory, people form their expectations of the future on the basis of future expectations
a. True b. False Indicate whether the statement is true or false