What type of profit can a firm in monopolistic competition make in the long run? Explain your answer.
What will be an ideal response?
Ques. 2Does a perfectly competitive producer have any incentive to undercut the current market price? Explain your answer
What will be an ideal response?
Ques. 3Kristen has an income of 450 per year to spend on music CDs and movies on DVDs. The price of a CD is 15. The indifference curves in the figure above (I1, I2, and I3 ) reflect Kristen's preferences. If the price of a DVD is 22.
50, then Kristen buys ________ DVDs; if the price of a DVD is 18.00, then Kristen buys ________ DVDs. A) 12; 14
B) 5; 10
C) 10; 15
D) 7.5; 12.5
Ques. 4When the consumption of a good creates an external benefit,
A) the marginal social cost curve lies below the marginal private cost curve.
B) the marginal social benefit curve lies above the marginal private benefit curve.
C) the quantity produced in an unregulated, competitive market is greater than the efficient quantity.
D) None of the above answers is correct.
Ques. 5For a monopsony, the labor supply curve
A) lies above the MCL curve.
B) is the same as the MCL curve.
C) lies below the MCL curve.
D) is the same as the labor demand curve.
Ques. 6In the figure above, the total revenue of a perfectly price-discriminating monopolist at the profit-maximizing output is equal to the area of
A) 0aij.
B) 0dgh.
C) aci.
D) obeij.
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