Long-run equilibrium under monopolistic competition is similar to long-run equilibrium under perfect ...

Long-run equilibrium under monopolistic competition is similar to long-run equilibrium under perfect competition in that:
 a. price equals the minimum average total cost.
  b. firms face perfectly elastic demand curves.
  c. price equals average cost.
 d. marginal revenue equals average cost.

QUESTION 2

Suppose a Canadian investor buys a one-year U.S. government bond that pays 7 percent interest. If the U.S. dollar appreciates 4 percent against the Canadian dollar during the year, what must be the yield on a comparable Canadian government bond for interest rate parity to hold?
 a. 3 percent
  b. 4 percent
  c. 7 percent
  d. 10 percent
  e. 11 percent

QUESTION 3

Ezybuy is a newly opened chain of departmental stores that offers its customers free home delivery for purchases above 100 . If this promotional policy increases the cost borne by the seller by 10 for every transaction, while each customer values this service at 3, it can be said to generate economic value.
  Indicate whether the statement is true or false

QUESTION 4

Monopolistic competition is similar to monopoly in that:
 a. firms face perfectly elastic demand curves.
 b. firms sell products for which there are no close substitutes.
  c. there is relatively free entry and exit.
 d. firms have some influence over the product price.

QUESTION 5

If a dollar invested in the United States yields the same return as a dollar's worth of yen invested in Japan, then it implies that:
 a. purchasing power parity exists.
  b. the foreign exchange market is in equilibrium.
  c. the dollar/yen exchange rate is fixed.
  d. interest rate parity exists.
  e. both the currencies are pegged to a fixed amount of gold.

QUESTION 6

If an economic change lowers the production cost of a commodity but does not reduce its market price, economic value will be created.
  Indicate whether the statement is true or false

QUESTION 7

Product differentiation in monopolistically competitive markets implies that:
 a. firms make economic profits in the long run.
 b. firms will produce at the minimum of the average total cost curve in the long run.
  c. individual firms face downward-sloping demand curves.
 d. firms are certain to earn economic profits in the short run.