A monopolistically competitive firm is currently earning a positive economic profit. If other firms enter the market, we would expect that the added competition will cause this firm to adjust its output such that it
a. will operate closer to its efficient scale.
b. will operate further from its efficient scale.
c. will no longer be at its efficient scale.
d. might move either closer to or further from its efficient scale.
b
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If a firm triples inputs and produces twice the output, then there are
A) constant returns to scale. B) diminishing marginal product. C) decreasing returns to scale. D) increasing returns to scale.
One guideline that should be used whenever possible in developing a model is to
a. keep the model as simple as possible b. make the model as complex as possible so that it will be more accurate than other models c. rely on as many assumptions as possible d. not be concerned about including unnecessary details e. make certain that the model is an accurate, complete depiction of reality