The economic inefficiency of monopolistic competition means that:
A. industries spend money on advertising and sales promotion.
B. firms do not maximize profits at the MC equals MR output.
C. firms produce at an output short of, and charge a price greater than, minimum average total cost.
D. industries tend to evolve into oligopolies rather than become more competitive.
Answer: C
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A period of stagflation can be considered as part of the normal aftermath of a
A. decrease in aggregate demand. B. period of high unemployment. C. period of low unemployment. D. period of inward shifting aggregate demand.
The BP curve is upward sloping if assets are perfectly substitutable
Indicate whether the statement is true or false
The neoclassical model predicts that nations that are initially poor should have
A) slower growth rates than nations that are rich. B) faster growth rates than nations that are rich. C) growth rates equal to those of nations that are rich. D) negative growth rates.
An individual bank can create deposits to the extent of its
A. excess reserves. B. required reserves. C. total reserves. D. deposits.