The markets for Products X and Y both have many sellers, each earning an economic profit of zero in the long run. One of the markets is perfectly competitive while the other is monopolistically competitive. Which of the following information can help you determine which operates in a monopolistically competitive market structure?
A. There is easy entry into the market for Product X.
B. The firms selling product Y choose the profit-maximizing quantity where MR = MC.
C. The price for Product X is higher than the marginal cost at the profit-maximizing quantity.
D. The price for Product Y is equal to the average total cost at the long-run equilibrium quantity.
Answer: C
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Other things being equal, a higher price induces
A) buyers to reduce the amount they want to buy and sellers to increase the amount they are willing to sell. B) buyers to increase the amount they want to buy and sellers to reduce the amount they are willing to sell. C) buyers to reduce the amount they want to buy and sellers to reduce the amount they are willing to sell. D) buyers to increase the amount they want to buy and sellers to increase the amount they are willing to sell.
A perfectly competitive firm producing 100 units of output per period finds that: Average total cost is $20; Average variable cost is $12; Marginal cost is $18 and increasing; Price of the product is $15. This firm should
a. produce more output b. raise the price of its product c. reduce production without shutting down d. shut down (reduce output to zero) e. do nothing (it is currently maximizing profit)
"Unfunded liability" refers to a government commitment to:
A. Not pay the government bonds that are coming due B. Spend in the future without also committing to collect enough tax money to pay for it C. Support the retirement funds of businesses who have gone bankrupt D. Put money in specific mutual funds in order to vouch for the funds' liabilities
The segments of a CMO are also called
A) tranches. B) coupons. C) obligations. D) revenues.