Answer the following statements true (T) or false (F)
1. If there are many firms in an industry, then it must be a purely competitive market.
2. The basic difference between pure competition and monopolistic competition is in the number of firms in the industry.
3. Competitive firms are price takers largely because of intensive advertising by their competitors.
4. For a purely competitive firm, the demand curve facing it is the same as its marginal revenue curve.
5. In pure competition, the industry demand curve is infinitely price elastic.
1. FALSE
2. FALSE
3. FALSE
4. TRUE
5. FALSE
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When equilibrium GDP falls below potential GDP, an inflationary gap exists
a. True b. False Indicate whether the statement is true or false
An economist who favored expanded government would recommend:
A. tax cuts during recession and reductions in government spending during inflation. B. tax increases during recession and tax cuts during inflation. C. tax cuts during recession and tax increases during inflation. D. increases in government spending during recession and tax increases during inflation.