One benefit of monopolistic competition over perfect competition is
A) economic profit.
B) product variety.
C) excess capacity.
D) efficiency.
B
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If the MPP of labor is 60 and the price of labor per period is $20, the MPP of machinery is 75, and the price of the machinery per period is $25, in order to achieve optimal input proportions, the firm should use
A. more labor and less machinery. B. more machinery and less labor. C. more labor with the same amount of machinery. D. the current combination.
A firm sells a product in a perfectly competitive market. The marginal cost of the product at the current output level of 200 units is $4. The minimum possible average variable cost is $3.50. The market price of the product is $3. To maximize profits or minimize losses, the firm should
A. shut down. B. continue producing 200 units. C. increase production to more than 200 units. D. decrease production to less than 200 units.
The basic proposition in international trade is that
A) trade is determined by absolute advantage. B) in the long run, imports are paid for by exports. C) everyone is made better off by free trade. D) fair trade is more important than free trade.
You own shares in a start-up internet company. If large swings in the stock market increase financial investors' concerns about market risk, then the price of your shares will ________, holding other factors constant.
A. either increase or decrease B. increase C. not change D. decrease