We would expect the cross elasticity of demand for Pepsi to be greater in relation to other soft drinks than that for soft drinks in general because:
A. soft drinks are normal goods.
B. the income effect always exceeds the substitution effect.
C. there are fewer good substitutes for soft drinks as a whole than for Pepsi specifically.
D. there are more good substitutes for soft drinks as a whole than for Pepsi specifically.
Answer: C
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In the long run, the equilibrium number of monopolistically competitive firms with trade:
a. is less than the total number of firms worldwide in autarky. b. is the same as the total number of firms worldwide in autarky. c. is greater than the total number of firms worldwide in autarky. d. may be less than, the same as, or greater than the total number of firms worldwide in autarky.
How can a firm stay in business if it makes no economic profit in the long run?
What will be an ideal response?