Hotels in New York City frequently experience an average vacancy rate of about 20 percent (i.e., on an average night, 80 percent of their rooms are full). This excess capacity is indicative of a(n) ____ industry.
a. perfectly competitive
b. monopoly
c. monopolistically competitive
d. oligopoly
QUESTION 2On which two factors do the consequences of a merger depend?
QUESTION 3Which of the following is uncharacteristic of monopolistic competition in the long run?
a. firms selling heterogeneous products
b. zero economic profits
c. price in excess of marginal revenue
d. equilibrium on the increasing portion of the average total cost curve
QUESTION 4To ensure interest rate parity, a decrease in the interest rate on Euroyen relative to Eurodollar deposits will require a greater expected appreciation of the Japanese yen against the U.S. dollar.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 5When can a seller's investment in reducing transaction cost increase the price of the product to customers but still leave them better off?
QUESTION 6Which of the following is uncharacteristic of monopolistic competition in the long run?
a. a large number of sellers in the industry
b. zero economic profits
c. price in excess of marginal cost
d. firms have no excess capacity
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