In the aggregate expenditures model, the equilibrium real GDP is
A. assumed to be equal to the full-employment real GDP level.
B. always less than the full-employment real GDP level.
C. always above the full-employment real GDP level.
D. not necessarily equal to the full-employment real GDP.
Answer: D
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Because each perfectly competitive firm sells a product identical to that of the other firms
A) each firm tries to cut prices to increase its market share. B) each firm's output is a perfect substitute for the output of any other firm. C) each firm expects to earn some economic profit. D) the demand for each firm's product is perfectly inelastic.
All of the following are strategies a firm with market power can adopt to increase it profits over time except:
A) mergers with, and acquisitions of, competing firms. B) erecting barriers to entry. C) setting price equal to the marginal costs of production. D) influencing the regulatory process.