Which of the following explains why firms in competitive price-searcher and competitive price-taker markets will both have zero economic profits in the long run but a monopoly will not?
a. There is always more than one firm in competitive price-searcher and competitive price-taker markets.
b. Both competitive price-searcher and competitive price-taker markets are characterized by firms producing identical goods, but a monopoly is not.
c. In both competitive price-searcher and competitive price-taker markets, the barriers to entry are low; this is not true under a monopoly.
d. A monopoly firm has a downward-sloping demand curve; firms in the other types of markets do not.
C
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Real consumption is a function of real disposable income, but the simple Keynesian model uses real GDP instead of real disposable income. This is appropriate since
A) we cannot measure either exactly and the purpose of the exercise is theoretical only. B) real disposable income tends to move proportionately with real GDP. C) real disposable income is a fixed percentage of real GDP. D) real GDP is a fixed percentage of real disposable income.
If total revenue exceeds fixed cost, a firm
A) is making short-run profits. B) should produce in the short run. C) has covered its variable cost. D) may or may not produce in the short run, depending on whether total revenue covers variable cost.
Medical savings accounts _____
a. provide insurance for very small health care expenditures b. provide little accountability for small purchases c. provide catastrophic coverage d. all of the above e. a and b
In general, the larger the price elasticity:
a. the smaller the responsiveness of price to changes in quantity. b. the smaller the responsiveness of quantity to changes in price. c. the larger the responsiveness of price to changes in quantity. d. the larger the responsiveness of quantity to changes in price.