In monopolistic competition, profits well in excess of costs are unlikely because _____.
(A) Customers always return to the product that is least expensive, even if the quality of that product is much lower.
(B) Established rivals and new firms would lure customers away with slightly different and/or cheaper products.
(C) Excess output can be maintained only for short periods.
(D) Nonprice competition only works for the short term.
Ans: (B) Established rivals and new firms would lure customers away with slightly different and/or cheaper products.
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Using the data in the above table and assuming constant opportunity costs, it is correct to state that
A) the United States has a comparative advantage in producing cloth. B) Mexico has an absolute advantage in producing both food and cloth. C) the United States has a comparative advantage in producing both food and cloth. D) Mexico has a comparative advantage in producing cloth.
Which of the following would increase the cyclically adjusted deficit?
A) an increase in income. B) a decrease in income. C) an increase in the primary deficit. D) a decrease in the primary deficit. E) none of the above