Monopolistically competitive firms do not achieve allocative efficiency in the long run because
a. marginal cost equals marginal revenue
b. marginal cost is greater than marginal revenue
c. marginal cost is less than marginal revenue
d. price is less than marginal cost
e. price is greater than marginal cost
E
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If a competitive market is at equilibrium, and if there is a sudden increase in demand, then a temporary
a. surplus will occur and the price will increase. b. shortage will occur and the price will fall. c. surplus will occur and the price will fall. d. shortage will occur and the price will increase.
When income rises for the buyers of good X, the ____________ curve for good X will shift ________________
A) demand; rightward B) demand; leftward C) supply; rightward D) supply; leftward E) This question cannot be answered unless we know whether good X is a normal good, a neutral good, or an inferior good.