A profit-maximizing perfectly competitive firm must decide:
A. only which industry to join, taking price and output as fixed.
B. only how much to produce, taking price as fixed.
C. only what price to charge, taking output as fixed.
D. both what price to charge and how much to produce.
Answer: B
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Which of the following is one common criticism of capitalism?
a. Poor product quality and little product diversity. b. Inefficiency of nationalized industries. c. Inability to adjust quickly to changing economic conditions. d. Inadequate environmental protection.
Why does a firm in monopolistic competition earn zero economic profit rather than an economic profit in the long run?
What will be an ideal response?
Although advertising raises the price of a monopolistic competitor's product, it does confer a benefit to consumers. Which of the following is a benefit to consumers?
A) Advertised products tend to be of higher quality so consumers feel special when they consume advertised products. B) Advertising engenders brand loyalty. C) Advertising could provide consumers with useful information about new products and enable them to comparison shop. D) Advertising acts as a barrier to entry.
Describe the difference between a microeconomic demand curve and an aggregate demand curve