In long-run equilibrium, a firm in monopolistic competition makes
A) an economic profit, but the economic profit is less than it would be if the firm was a monopoly.
B) an economic profit that is higher than what it would be if the firm was a monopoly.
C) zero economic profit.
D) an economic profit that is the same amount as it would be if the firm was a monopoly.
E) an economic profit, an economic loss, or zero economic profit.
C
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GDP counts only final goods and services because this
A) method avoids including any goods that are produced this year and sold next year. B) method avoids double counting of goods going through several stages of production. C) amount can be more easily determined in the marketplace. D) method avoids understating the value of GDP produced during a given year.
Employing the government budget diagram shown in Figure 5-1 above, assume that the economy is initially in equilibrium at point A. The movement A to D represents
A) an increase in government spending and/or a decrease in taxes. B) a decrease in government spending and/or an increase in taxes. C) a decrease in government spending and a decrease in taxes. D) an increase in government spending and an increase in taxes.