Which of the following statements is true about monopolistically competitive firms?
A) Like perfectly competitive firms, monopolistically competitive firms are not able to raise prices without losing all of their customers because they face competition from firms selling similar products.
B) Unlike perfectly competitive firms, monopolistically competitive face perfectly inelastic demand curves.
C) Like perfectly competitive firms, monopolistically competitive firms maximize their profits by setting price equal to marginal cost.
D) Unlike perfectly competitive firms, monopolistically competitive firms are able to raise their prices without losing all of their customers.
D
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Which of the following does not foster innovation and technological advance?
A. Competition in markets B. Freedom of choice and enterprise C. Self-interest and personal rewards D. Fear and avoidance of risk
Macroland produces dishes and glassware. Before trade, a set of dishes sells for $100 and a set of glasses sells for $50. When Macroland opens to trade, foreign demand for domestically produced china is strong, raising the price of a set of dishes to $125. But foreign competition reduces the demand for domestically produced glasses, so they now sell for $25 a set. Assuming workers cannot move between industries, the wages of workers producing dishes will ________ and the wages of workers producing glasses will ________.
A. decrease; increase B. increase; increase C. increase; decrease D. increase; not change