Is collusion possible in monopolistic competition? Why or why not?
What will be an ideal response?
Collusion is not possible in monopolistic competition. It is not possible because there are many firms in monopolistic competition, reaching an agreement to restrict output and boost price is impossible.
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The economy is in the horizontal portion of the AS curve, there is no liquidity trap and investment is sensitive to changes in the interest rate. According to the Keynesian transmission mechanism, if the money supply drops the interest rate will __________, investment spending will __________, the AD curve will shift to the __________, and the price level will __________
A) rise; fall; left; rise B) fall; rise; right; rise C) rise; fall; left; not change D) fall; fall; left; fall E) rise; rise; left; fall
From the standpoint of economic efficiency, competitive markets provide:
A. less of a public good than would be efficient. B. more of a public good than would be efficient. C. exactly the amount of a public good that is efficient. D. an efficient amount but at a higher cost.