In the long run, the most helpful action that a monopolistically competitive firm can take to maintain its economic profit is to
A) continue its efforts to differentiate its product.
B) raise its price.
C) lower its price.
D) do nothing, because it will inevitably experience a decline in profits.
A
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The government of Economica announces that it will purchase its farmers’ surplus of milk. From this announcement, you can infer that Economica has a
A. free market for milk. B. price ceiling above the equilibrium price for milk. C. price floor above the equilibrium price for milk. D. price floor below the equilibrium price for milk.
The government can help solve the information asymmetry problem by:
A. making it illegal to complete a transaction without complete information. B. providing the missing information to the less-informed party. C. requiring the more informed party to not use the imbalance to their advantage. D. All of these statements are true.
Adverse selection is more likely when
a. a job requires specific training b. a job requires intangible or unmeasurable abilities c. the wage offered is above the average of all wages in the market d. the wage is based on true marginal revenue products e. performance can be monitored closely
Sharon buys some common stock in 1990 for $10,000 and sells it in 2000 for $15,000 . During the same period, prices have risen by 75 percent. The net result of Sharon's stock purchases is that she will
a. pay no taxes because she earned negative real capital gains. b. lose purchasing power and have to pay taxes anyway. c. earn a real capital gain of $5,000 plus 75 percent. d. earn a real capital gain of $15,000 minus 75 percent.