A monopolistically competitive firm, like a perfectly competitive firm, is a price taker.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 2What is the shape of the average fixed cost curve for a firm in the short run?
a. U-shaped.
b. A curve that constantly increases as output expands and eventually approaches infinity at high rates of output.
c. A vertical line.
d. A curve that declines as output expands and approaches the horizontal-axis when output is large.
QUESTION 3According to Keynes, in order to get the economy out of a recession, the government should:
a. follow an expansionary fiscal policy.
b. encourage firms to export to other nations.
c. follow an contractionary fiscal policy.
d. follow a contractionary monetary policy.
e. not interfere in the market and let the market system heal itself.
QUESTION 4The monopolistic competition market structure is characterized by a few large firms which account for a large percentage of industry sales.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 5Which of the following is true if the total cost curve is rising?
a. Total fixed cost is decreasing.
b. Total fixed cost is increasing.
c. Marginal cost is decreasing.
d. Marginal cost is increasing.
QUESTION 6An increase in government spending, other things constant, will cause a:
a. leftward shift of the aggregate supply curve.
b. rightward shift of the aggregate supply curve.
c. leftward shift of the aggregate demand curve.
d. rightward shift of the aggregate demand curve.
e. downward movement along the aggregate supply curve.
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