Inflation caused by an increase in aggregate spending is referred to as:
A. demand-push inflation.
B. demand-pull inflation.
C. hyperinflation.
D. cost-push inflation.
Answer: B
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In the long run in a monopolistically competitive industry,
a. economic profit will be positive b. the price will be driven to zero c. the firm will not operate where MR = MC d. economic profit will be zero e. the price will exceed average total cost
Suppose that a firm in monopolistically competitive market is producing 30 units of output. At this level of production, the firm charges $50 per unit. Its marginal cost is $24 and marginal revenue is $24, and average cost is $20 per unit. Given this information, in the long run you would expect
A. firms to exit the market. B. price to increase. C. firms to enter the market. D. firms to maintain their current output and price.