In a monopolistically competitive market,
a. the entry of new firms creates externalities.
b. the absence of restrictions on entry by new firms ensures that there will be no deadweight loss.
c. there are always too many firms in the market relative to the socially-optimal number of firms.
d. firms cannot earn positive economic profits in the short run.
a
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If the price level should increase in the near term due to decreases in the short-run aggregate supply, the result would be
A) demand-pull inflation. B) demand-pull recession. C) cost-push inflation. D) cost-pull expansion.
For a particular good, an 8 percent increase in price causes a 4 percent decrease in quantity demanded. Which of the following statements is most likely applicable to this good?
a. There are many close substitutes for this good. b. The good is a luxury. c. The market for the good is broadly defined. d. The relevant time horizon is long.