The major similarity between a monopolist and a monopolistically competitive firm is that:
a. both are price takers.
b. both face a horizontal demand curve.
c. both are the sole producers of a particular good.
d. both face a negatively sloped demand curve.
e. both are affected by the decision of their rivals.
d
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Which of the following increases the equilibrium price of a used car and decreases the equilibrium quantity?
A) an announcement by the U.S. Attorney General that the windows on older cars were made with cheaper glass that can explode at high speeds B) new federal legislation that raises the legal driving age to twenty-four in all states C) a new fee that used car dealers must pay to the government on all sales of used cars D) all of the above because each is consistent with the "law of demand"
In the medium run, a tax increase that causes a reduction in the budget deficit will
A) affect only the price level. B) not affect the price level but will alter the composition of output. C) not affect the level of output, but will affect the composition of output. D) affect both the level and composition of output.