During the 1970s, the price/earnings ratio of stocks in the S&P 500 was relatively low. This low P/E ratio was
a. surprising because the inflation rate was high during the 1970s.
b. not surprising because interest rates were low during the inflationary 1970s.
c. not surprising because interest rates were high during the inflationary 1970s.
d. surprising because the inflation rate was low during the 1970s.
C
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If identical firms sell an undifferentiated product, advertising is likely to be
A) used to attack the rivals' products. B) collectively undertaken by the industry group. C) strategically aimed at deterring entry. D) focused on secret ingredients.
The "Bubbles, Bubbles" soap bubble firm's price and cost data are: price = $10; MR = $10; MC = $10; ATC = $10 . This firm is
a. making an economic profit of $10 b. in monopolistic competition and in short-run equilibrium c. about to shut down because economic profit is zero d. a monopolist with a relatively inelastic demand e. in a perfectly competitive market and in long-run equilibrium