A monopolistically competitive market
a. usually has too many firms, reducing the economic profit of each firm to zero.
b. usually has too few firms, reducing the product variety for consumers.
c. may have too many or too few firms, and the government can intervene to achieve the optimal number of firms.
d. may have too many or too few firms, but the government can do little to rectify the situation.
d
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Refer to Figure 8A.1. Capital deepening occurs as long as
A) total saving exceeds depreciation. B) the level of Y is increasing. C) total saving and depreciation are equal. D) depreciation exceeds total saving.
A budget constraint
A) represents the bundles of consumption that make a consumer equally happy. B) reflects the desire by consumers to increase their income. C) refers to the limited amount of income available to consumers to spend on goods and services. D) shows the prices that a consumer chooses to pay for products he consumes.