One symptom of the inefficiencies associated with monopolistic competition is industry wide excess capacity.
Answer the following statement true (T) or false (F)
True
The typical firm in a monopolistically competitive market produces at a rate of output that is less than its minimum-ATC output rate. This implies that the same level of industry output could be produced at lower cost with fewer firms.
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The Fed sells $1 million in bonds to a bond dealer. The bond dealer's bank experiences
A) a decrease in assets of $1 million as its reserves decrease and an increase in liabilities of $1 million as its deposits rise. B) a decrease in assets of $1 million as its reserves decrease and a decrease in liabilities of $1 million as its deposits fall. C) no change in assets or liabilities. D) an increase in assets of $1 million as its deposits fell by $1 million, and a decrease in liabilities as its reserves fell by $1 million.
Figure 32.1 represents the market for loanable funds. The equilibrium interest rate
A. Is less than the rate of return on capital. B. Is equal to the risk premium. C. Represents the price paid for the use of money. D. Is greater than the rate of return on capital.