In monopolistic competition, profits well in excess of costs are unlikely because _____.
(A) Customers always return to the product that is least expensive, even if the quality of that product is much lower.
(B) Established rivals and new firms would lure customers away with slightly different and/or cheaper products.
(C) Excess output can be maintained only for short periods.
(D) Nonprice competition only works for the short term.
Ans: (B) Established rivals and new firms would lure customers away with slightly different and/or cheaper products.
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If marginal cost is less than marginal revenue, a firm should
a. expand output. b. contract output. c. maintain steady output. d. shut down.
Wikipedia is an example of a:
A. a public good. B. a private good. C. a common resource. D. an artificially scarce resource.
Tax cuts and increased income transfers have the same fiscal stimulus, dollar for dollar.
Answer the following statement true (T) or false (F)
The production function Q = L.5K.5 is called:
A. linear. B. Cobb Douglas. C. Leontief. D. None of the answers are correct.