Suppose that an economy wants to eliminate the resource waste associated with excess capacity in monopolistically competitive markets. Which of the following would achieve this goal?
A. Firms are required to charge the same price.
B. Firms are allowed to establish significant barriers to entry.
C. Firms are encouraged to produce less output.
D. Firms are required to set price equal to marginal cost.
Answer: D
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If the real interest rate is 8 percent and the inflation rate is 2.5 percent, then the nominal interest rate is
A) 8 percent. B) 10.5 percent. C) 3.2 percent. D) 2.5 percent. E) 5.5 percent.
Which of the following are examples of injections?
a. government purchases, net taxes and exports b. government purchases, investment spending and exports c. net taxes, imports and household saving d. household saving, imports and government purchases e. exports, imports and household saving
What is the type of mechanism that answers the basic economic questions through a decentralized decision making process?
A. dictatorship B. market system C. command and control D. mixed economic system
When production reflects consumer preferences, ________ occurs
A) allocative efficiency B) productive efficiency C) equity D) efficient central planning