In the short run, the monopolistic competitor is just like the perfect competitor in that
A) equilibrium is determined by setting price equal to marginal cost.
B) either type of firm can earn economic profits, experience economic losses, or break even in the short run.
C) each equates marginal revenue and marginal cost in order to maximize profits, with the result that price exceeds marginal revenue.
D) new firms enter in the short run when firms are making profits.
B
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Adverse selection is a barrier to financing global growth because
A) of the differences between financing using loans, portfolio investment and foreign direct investment. B) if investors have trouble identifying high-risk firms they may be unwilling to lend funds to creditworthy firms. C) firms sometimes have trouble determining whether they need funds or not. D) there is the possibility that the funds are used for riskier behavior than the lender agreed to.
Provisions in loan contracts that prohibit borrowers from engaging in specified risky activities are called
A) proscription bonds. B) restrictive covenants. C) due-on-sale clauses. D) liens.