Is it true that in the long run, a monopolistically competitive firm has market power but earns no profit? Explain
What will be an ideal response?
As strange as it sounds, yes. The firm earns zero profit because p = AC. The firm has market power because p > MC. One way to explain this is that the firm has market power to set price, but has no power to prevent entry.
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A linear total cost curve which passes through the origin implies that:
a. average cost is constant and marginal cost is variable. b. average cost is variable and marginal cost is constant. c. average and marginal costs are constant and equal. d. need more information to answer question.
Which of these factors can explain the short recession experienced by the U.S. in 2001?
a. Terrorist attacks b. The stock market crash c. Bursting of the real estate bubble d. A rise in international oil prices e. Expenditure on war