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.
Answer: C
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A negative value for the U.S. official reserve assets line in the balance of payments accounts means that
A) U.S. residents have sold more gold to foreigners than they bought. B) U.S. residents bought more gold from foreigners than they sold. C) the U.S. central bank has increased its holdings of foreign reserve assets. D) the U.S. central bank has decreased its holdings of foreign reserve assets.
In the context of portfolio diversification,
A) investors are compensated for diversifiable risk in the portfolio. B) prudent investors should hold about three to five stocks in their portfolio. C) a stock index mutual fund is a financial intermediary that offers small investors a way to participate in the performance of the stock market as a whole. D) financial intermediaries make it more difficult to be diversified.