When trade occurs among nations with similar tastes, technology, products, and costs, monopolistically competitive firms will have an incentive:
a. to lower prices to get new customers and increase market share.
b. to raise prices to take advantage of a lucrative situation.
c. to cut corners in manufacturing to boost profits.
d. to raise quality, so they can charge a higher price than the competition.
Ans: a. to lower prices to get new customers and increase market share.
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No firm's total revenue could exceed its total opportunity costs if
A) all firms were price takers. B) prices always cleared the market. C) quantity demanded of every good equaled the quantity supplied. D) the future were completely predictable. E) there were no legal restrictions on entry into any industry.
Which component of the quantity equation is assumed constant by the quantity theory of money?
A. the money supply B. the velocity of money C. the level of income D. the price level