Which of the following statements is FALSE concerning monopolistic competition?
A) There are many firms.
B) Firms sell a differentiated product.
C) Each firm's actions influence rival firms.
D) Firms are free to enter and exit.
C
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Wichita is building a convention center and financing it with revenues raised from a city hotel tax. Local politicians assert that the convention center is essentially free for Wichita residents because out-of-town visitors are paying for it
Someone who is practicing the economic way of thinking would disagree because A) the hotel tax may lead to a decline in visits to Wichita. B) they believe that Wichita does not need a new convention center. C) the hotel tax may reduce commercial property values in the area. D) there are other projects that could be undertaken with the tax funds. E) the convention center may not pass a marginal cost-benefit test.
If movies on DVD for home rental and movies seen at a theater are substitutes, and the price of movies seen at a theater increases, the demand for movies on DVD will:
A) increase. B) stay the same. C) decrease. D) cannot be determined.