When comparing perfect competition and monopolistic competition, we find that
A) firms in monopolistic competition produce identical products just as do firms in perfect competition.
B) firms in monopolistic competition face barriers to entry, unlike firms in perfect competition.
C) advertising plays a large role in monopolistic competition, unlike in perfect competition.
D) firms in monopolistic competition are price takers just as is the case for firms in perfect competition.
Ques. 2Using the data in the above table, if the government sector runs a deficit of 250 billion and net exports equal -500 billion, then saving must equal
A) 450 billion.
B) 250 billion.
C) 1,350 billion.
D) 400 billion.
Ques. 3In the short run, when the Fed decreases the quantity of money
A) bond prices fall and the interest rate rises.
B) bond prices rise and the interest rate falls.
C) the demand for money increases.
D) the supply of money curve shifts rightward.
Ques. 4Let MUa and MUb stand for the marginal utilities of apples and bagels. Let Pa and Pb stand for their prices. The general necessary condition for consumer equilibrium is
A) MUa = MUb.
B) MUa = MUb and Pa = Pb.
C) MUa/Pa = MUb/Pb.
D) MUa/MUb = Pb/Pa.
Ques. 5If the consumption of a good decreases the quantity available for another person, the good is
A) rival.
B) excludable.
C) pure.
D) free.
Ques. 6Based on the above, which figure shows the impact of a decrease in the population available to work?
A) Figure A
B) Figure B
C) Figure C
D) Figure D
Ques. 7The prisoners' dilemma has an equilibrium that is
A) a Nash equilibrium and both players confess.
B) not a Nash equilibrium and both players confess.
C) a Nash equilibrium and both players deny.
D) not a Nash equilibrium and both players deny.
Ques. 8Which of the following does NOT contain an externality?
A) I sell you an ice cream and you drip it all over the person sitting next to you.
B) I sell you an ice cream and it gives you a headache.
C) I sell you an ice cream and you share it with your friend.
D) I give you an ice cream and you share it with a friend.
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