Answer the following statement(s) true (T) or false (F)
1. Once entry and exit have driven economic profits to zero, the demand curve and average total cost curve will be tangent to each other.
2. In monopolistic competition, increasing output to lower average total cost is unprofitable.
3. In monopolistic competition, the tendency is for an industry to have too few firms.
4. With monopolistic competition, society is willing to pay more for the product than it costs society to produce it.
5. With monopolistic competition, firms fail to meet allocative efficiency because marginal cost is more than price.
1. TRUE
2. TRUE
3. FALSE
4. TRUE
5. FALSE
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Which of the following is most likely to exert the bargaining power of a buyer?
A) Barnes and Noble purchases books from publishers for sale in its online stores. B) Cowgirl Creamery, a small cheese producer, seeks a dairy farm for its organic milk supplies. C) Wal-Mart, the world's largest discount store, seeks vendors to supply products made exclusively for its stores. D) Ground beef producers seek to purchase cattle from ranchers.
Which of the following most accurately describes the invisible hand concept?
a. Wise central planning by government is necessary for the efficient use of resources. b. In a democratic setting, majority rule will result in the efficient use of resources. c. In a market setting, when individuals pursue their own interests, they simultaneously tend to promote the public interest. d. In a market setting, when individuals pursue their own interests, they tend to engage in activities that lower the overall economic welfare of society.