Under monopolistic competition, profits cannot persist because new firms will be attracted to the market.

Suppose a country imposes a lump-sum income tax of $5,000 on each individual in the country. What is the average income tax rate for an individual who earns $40,000 during the year?

a. 0% b. 10% c. More than 10% d. The average tax rate cannot be determined without knowing the entire tax schedule.

The goal of product differentiation and advertising in monopolistic competition is to make

A. price more of a factor and product differences less of a factor in consumer purchases. B. price less of a factor and product differences more of a factor in consumer purchases. C. the firm productively efficient even if it is not allocatively efficient. D. the firm allocatively efficient even if it is not productively efficient.