High and variable rates of inflation will
What will be an ideal response?
distort the information delivered by market prices
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What effect does the entry of new firms in a monopolistically competitive market have on the economic profits of existing firms in the market? How might existing firms attempt to counteract this effect?
What will be an ideal response?
Money facilitates trade because
a. it eliminates the need for specialization b. it prevents people from taking advantage of each other c. it serves as a medium of exchange d. division of labor allows money to be produced at a lower cost e. people do not benefit from barter unless money is used
When a particular negative externality affects a very large number of people, it is likely that
a. government will not find it worthwhile to impose a corrective tax. b. private solutions to the problem will dominate any attempt by government to alleviate the problem. c. the solution to externalities suggested by the Coase theorem will work very well. d. the solution to externalities suggested by the Coase theorem will not work.
The key characteristics of a monopolistically competitive market structure include
A) many small (relative to the total market) sellers acting independently.
B) barriers to entry are strong.
C) all sellers sell a homogeneous product.
D) sellers have no incentive to advertise their products.