In monopolistic competition, in the short run a firm maximizes its profit by selecting an output at which marginal cost equals

Without government intervention, society is likely to get too little production of: i. private goods that generate external costs ii. private goods that generate external benefits iii. public goods

a. (i) only b. (ii) only c. (iii) only d. both (ii) and (iii)

People anticipate inflation will be 3 percent during the next several years. If this is true, when the real interest rate is 4 percent, the money interest rate will be

a. 1 percent. b. 3 percent. c. 4 percent. d. 7 percent.