Monopolistically competitive firms, like perfectly competitive firms, sell a differentiated product.
Answer the following statement true (T) or false (F)
False
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When there are many producers of an identical product and you have perfect and free information about what every seller is charging, eventually every merchant will
A) raise the price of the product in hopes that you will purchase the product from them. B) agree to charge a high price for the product so each will be able to earn high profits. C) charge the same price for the product, and the price will be just enough to cover costs. D) discontinue selling the product since there is so much competition.
What is the multiplier? If MPC =0.75, what is the value of the multiplier in the simple model of the economy?
What will be an ideal response?
Keynesian policies focus on _____while neoclassical policies focus on __________.
a. long-run potential GDP; actual GDP b. aggregate supply; aggregate demand c. aggregate demand; aggregate supply d. actual GDP; long-run potential GDP
If the total cost of producing 20 units of output is $1,000 and the average variable cost is $35, what is the firm's average fixed cost at that level of output?
A) $65 B) $50 C) $15 D) It is impossible to determine without additional information.