If firms in a monopolistically competitive market are earning economic profits, which of the following scenarios best reflects the change a representative firm experiences as the market adjusts to its long-run equilibrium?
A) Demand decreases and becomes less elastic.
B) Demand decreases and becomes more elastic.
C) Demand increases and becomes less elastic.
D) Demand increases and becomes more elastic.
Answer: B
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The certainty effect shows that
A) people are overconfident about their choices. B) people prefer certain outcomes to uncertain outcomes even when the expected value of the uncertain outcome is lower. C) people prefer certain outcomes to uncertain outcomes even when the expected value of the uncertain outcome is higher. D) people prefer certain outcomes to uncertain outcomes even when the expected values are the same.
Many economists describe the 2007–2009 period in the United States as being a condition of a(n)
A. deflationary gap. B. recessionary gap. C. inflationary gap. D. reflationary gap.
The Federal Trade Commission was created to study industry structures and behavior and identify anticompetitive practices.
Answer the following statement true (T) or false (F)
What is adverse selection?
A) It refers to the private, self-interested actions people that people pursue, which when taken collectively leads to a loss in economic surplus. B) It refers to the actions people take after they have entered into a transaction that make the other party to the transaction worse off. C) It refers to the situation in which one party to a transaction takes advantage of knowing more than the other party to the transaction. D) It refers to the actions people take before they enter into a transaction so as to mislead the other party to the transaction.