The product-variety externality arises in monopolistically competitive markets because
a. firms produce with excess capacity.
b. firms try to differentiate their products.
c. firms would like to produce homogeneous products, but the large number of firms prohibits it.
d. entry and exit is restricted.
b
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Specialization and trade
A) does not benefit anyone. B) allows nations to produce inside their individual production possibilities frontier. C) allows nations to consume combinations of products that are outside their individual production possibilities frontier. D) shifts the production possibilities frontier inward. E) shifts the production possibilities frontier outward.
If X is a normal good, a rise in money income will shift the:
A. supply curve for X to the left. B. supply curve for X to the right. C. demand curve for X to the left. D. demand curve for X to the right.