Economists have long debated whether there is a significant loss of well-being to society in markets that are monopolistically competitive rather than perfectly competitive
Which of the following offers the best reason why some economists believe that monopolistically competitive markets are less efficient than perfectly competitive markets?
A) In contrast to perfectly competitive markets, firms in monopolistically competitive markets can charge a price greater than average total cost in the short run.
B) In contrast to perfectly competitive markets, firms in monopolistically competitive markets do not produce where price equals average total cost in long-run equilibrium.
C) In contrast to perfectly competitive markets, neither allocative efficiency nor productive efficiency are achieved in monopolistically competitive markets.
D) In contrast to perfectly competitive markets, firms in monopolistically competitive markets earn economic profits in long-run equilibrium.
C
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All of the following are ways in which the government can help insure the quality of information consumers receive except
A) enforcing truth-in-advertising standards. B) awarding monopolies to political supporters and family members. C) requiring businesses to undergo audits of their financial conditions. D) publishing the academic performance of schools.
An example of a normative statement is:
A) The rate of unemployment is 4 percent. B) A high rate of economic growth is good for the country. C) The federal government spends half of its budget on national defense. D) People with health insurance tend to spend more on health care than those who are uninsured.