Which of the following is NOT a characteristic of firms in a monopolistically competitive market?
A) advertising
B) differentiated products
C) ease of entry and exit
D) existence of significant economies of scale
Answer: D
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A decrease in the demand for soft drinks due to changes in consumer tastes, accompanied by an increase in the supply of soft drinks as a result of reductions in input prices, will result in
A) a decrease in the equilibrium quantity of soft drinks and no change in the equilibrium price. B) a decrease in the equilibrium price of soft drinks; the equilibrium quantity may increase or decrease. C) an increase in the equilibrium quantity of soft drinks; the equilibrium price may increase or decrease. D) a decrease in the equilibrium price of soft drinks and no change in the equilibrium quantity.
If a firm is using a resource hired in a perfectly competitive market, and if the marginal resource cost is less than its marginal revenue product,
a. more of the resource should be used b. less of the resource should be used c. the firm should pay a lower price for the resource d. the firm should pay a higher price for the resource e. the firm is using the optimal amount of the resource