Compare perfect competition and monopolistic competition. In what ways are they similar? In what ways are they different?
What will be an ideal response?
Because of freedom of entry, economic profits are zero in the long run both for perfect competition and monopolistic competition. But firms in monopolistic competition charge a price greater than marginal cost. This implies that monopolistically competitive industries do not produce the efficient level of output. Also, firms in monopolistic competition do not realize all the economies of scale available. In addition, another difference is that firms in monopolistic competition produce differentiated products. Firms in perfect competition only produce homogenous goods.
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Torrie is thinking of starting up a small business selling hand-painted wine glasses. She asks her sister, Lisette, if she'd like to join her in setting up a partnership to start the business
What is one disadvantage in joining the partnership that Lisette should consider? A) Lisette should realize that, as an owner of the business, she will be personally responsible for the debts of the business. B) Lisette should realize that her profits in the partnership will always be less than Torrie's profits, since Torrie had the idea to start the business. C) Lisette should realize that Torrie will have complete control over the business because it was her idea. D) Lisette should realize that only Torrie will be allowed to own stock in the business as the founding partner.
When the Fed supplies the banking system with an extra dollar of reserves, deposits ________ by ________ than one dollar—a process called multiple deposit creation
A) increase; less B) increase; more C) decrease; less D) decrease; more