In the short run, monopolistically competitive firms will maximize profits by:
A. acting like perfectly competitive firms.
B. acting like monopolists.
C. playing strategic games like oligopolists.
D. None of these statements is true.
B. acting like monopolists.
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A recessionary gap can be closed with
A) using a contractionary monetary policy. B) an increase in taxes. C) a decrease in government purchases. D) using an expansionary fiscal policy.
If the value of the price elasticity of demand is -0.2, this means that a
a. 20 percent decrease in price causes a 1 percent increase in quantity demanded b. 0.2 percent decrease in price causes a 1 percent increase in quantity demanded c. 5 percent decrease in price causes a 1 percent increase in quantity demanded d. 0.2 percent decrease in price causes a 0.2 percent increase in quantity demanded e. 100 percent decrease in price causes a 200 percent increase in quantity demanded