Which of the following statements about a monopolistically competitive firm is FALSE?
A) It tries to differentiate its product from that of competitors.
B) It may earn short-run economic profits.
C) It produces the quantity at which MC=MR.
D) It sets price like a perfectly competitive firm.
D
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According to behavioral economists, people's preferences toward a particular outcome:
A. depend heavily on the contextual information that defines whether that outcome is a gain or a loss. B. are context independent because the same state of being is created regardless of one's previous circumstances. C. differ across people but are fixed for any given individual. D. depend primarily on genetics rather than environmental or contextual forces.
Suppose that development of oil fields around the Caspian Sea leads to an increase in the world supply of gasoline. This change in the market for gasoline would lead to
a. an increase in the equilibrium price and lower consumer surplus b. a decrease in the equilibrium price and greater consumer surplus c. an increase in the equilibrium price and greater consumer surplus d. a decrease in the equilibrium price and lower consumer surplus e. no change in consumer surplus