Monopolistic competition describes a market with:
A. many firms that sell goods and services that are standardized.
B. many firms that sell goods and services that are similar, but slightly different.
C. few firms that sell goods and services that are standardized.
D. few firms that sell goods and services and some barriers to entry.
Answer: B
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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.
Diminishing marginal returns means that aggregate production function is
a. linear b. downward sloping c. upward sloping d. concave e. convex
During a period of rapid growth in output,
a. employment generally increases and unemployment decreases. b. employment generally decreases and unemployment increases. c. both employment and unemployment generally increase. d. both employment and unemployment generally decrease.
The output effect describes the situation when a monopolist sells more output and, all else equal, total revenue
a. increases. b. decreases. c. is unchanged. d. is maximized.