Monopolistic competition tends to lead firms to have wasted capacity. Why?
Under monopolistic competition in the long run, the firm will tend to produce an output lower than that which minimizes its unit costs, and hence unit costs of the monopolistic competitor will be higher than necessary. Because the level of output that corresponds to minimum average cost is naturally considered to be the firm's optimal capacity, this result has been called the excess capacity theorem of monopolistic competition.
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The ability to pay principle suggests that: a. traditional exemptions should be removed since they are more frequently used by people with ability to pay more taxes. b. people with different levels of income should be treated in the same manner
c. individuals receiving the benefits should be those who pay for them. d. those with the greatest ability to pay taxes should pay more than those with the least ability to pay taxes.
Other things equal, a broad shift to expecting depreciation of the euro will lead to
A. an increase in official exchange market intervention by the euro area monetary authorities. B. an inflow of capital to Europe. C. a lowering of exports of European goods and services. D. a decrease in the demand for euro-denominated financial assets.