In the long run, firms in monopolistic competition become price takers

You offer an extended warranty for your product that is purchased by a few customers. If the product typically fails 2% of the time, the claim rate will exceed 2% of warranty purchasers because

a. adverse selection will lead those who are more reckless to purchase the warranty b. moral hazard will lead those who purchase to be more reckless c. you systematically underestimate product failure rates d. A and B

If a natural disaster were to cause a negative long-run supply shock to the economy, once the economy adjusts, the new equilibrium will be at a:

A. higher price level and lower level of output. B. lower price level and lower level of output. C. higher price level and higher level of output. D. lower price level and higher level of output.