In monopolistic competition there? is/are
A) only one seller who faces a downward-sloping demand curve.
B) many sellers who each face a perfectly elastic demand curve.
C) a few sellers who each face a downward-sloping demand curve.
D) many sellers who each face a downward-sloping demand curve.
Answer: D) many sellers who each face a downward-sloping demand curve.
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The self-correcting tendency of the economy means that falling inflation eventually eliminates:
A. exogenous spending. B. recessionary gaps. C. expansionary gaps. D. unemployment.
Compared to a monopsony, a perfectly competitive labor market results in a
A) higher wage rate and more workers hired. B) higher wage rate and fewer workers hired. C) lower wage rate and more workers hired. D) lower wage rate and fewer workers hired.
There are 1,000 identical firms in a price-taker industry. In the short run, total revenues of each firm exceed total costs. What will happen in the long run?
a. Nothing, because each firm is already maximizing its profits. b. Many firms will enter the market and each firm will eventually operate at a loss. c. Additional firms will enter the market, and price will be driven down to where each firm will be making just enough to stay in business. d. Additional firms will enter the market, but the price will remain the same because the existing firms will not allow price to decrease.
Central planning is an ineffective method to organize an economy because
A) central planners do not respond predictably to incentives. B) central planners cannot possibly obtain all the information necessary to allocate resources efficiently. C) most central planners are less intelligent than business entrepreneurs in market economies. D) central planners have inadequate funding to meet the needs of their constituents.