Which of the following is FALSE about a comparison between a perfectly competitive firm and a monopolistically competitive firm?
A) A perfectly competitive firm has a horizontal demand curve, while a monopolistically competitive firm has a downward sloping demand curve.
B) In the short run, a perfectly competitive firm will earn zero economic profits, while a monopolistically competitive firm will earn positive economic profits.
C) Both the perfectly competitive and monopolistically competitive firm will earn economic profits equal to zero in the long-run.
D) In the long run, the perfectly competitive firm will produce at the minimum of the average total cost curve, while the monopolistically competitive firm will produce to the left of the minimum of the average total cost curve.
Answer: B
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A) nominal GDP must equal real GDP. B) real GDP must equal potential GDP. C) real GDP must be greater than potential GDP. D) real GDP might be greater than, equal to, or less than potential GDP. E) real GDP must be less than potential GDP.
The difference between economists speaking as scientists or policy advisers boil down to the difference between
a. assumptions and theories. b. true statements and false statements. c. specific statements and general statements. d. positive statements and normative statements.