In the dynamic aggregated demand and aggregate supply model, if AD shifts faster than AS,
A) deflation occurs.
B) stagflation occurs.
C) inflation occurs.
D) disinflation occurs.
C
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One major similarity between perfect competition and monopolistic competition is that:
a. the firms earn above normal profits in the long run. b. the firms are price makers. c. the firms produce identical products. d. the firms just break even in the long run. e. entry of firms is barred in the long run.
Consider two firms competing to sell a homogeneous product by setting price. The inverse demand curve is given by P = 6 ? Q. If each firm's cost function is Ci(Qi) = 6 + 2Qi, then each firm will symmetrically produce ________ units of output and earn ________.
A. 2 units; losses of $6 B. 4 units; losses of $2 C. 4 units; profits of $6 D. 2 units; profits of $2