1.What is the primary mechanism that allows perfectly competitive markets to reach long-run equilibrium? Changes in the price of substitutes and complements Firms freely enter or exit the market when it is in their interest to do so Changes in consumer tastes Changes in production technology 2. Which of the following is true? Marginal cost curves are always downward sloping. A monopolist can set their price as high as they want without decreasing their sales. Firms have no fixed costs in the long run. A monopoly is a market in which many competitors sell identical goods. 3. Firms in monopolistic competition can increase demand for their product through effective advertising. Why might these firms choose not to invest in additional advertising? Advertising is almost never effective for firms in monopolistic competition. They don’t feel like it. Advertisements increase firm costs, and the increase in demand may not justify these costs. Advertising can be deceptive and firms don’t want to lie to their customers.
1.What is the primary mechanism that allows perfectly competitive markets to reach long-run equilibrium? Changes in the price of substitutes and complements Firms freely enter or exit the market when it is in their interest to do so Changes in consumer tastes Changes in production technology 2. Which of the following is true? Marginal cost curves are always downward sloping. A monopolist can set their price as high as they want without decreasing their sales. Firms have no fixed costs in the long run. A monopoly is a market in which many competitors sell identical goods. 3. Firms in monopolistic competition can increase demand for their product through effective advertising. Why might these firms choose not to invest in additional advertising? Advertising is almost never effective for firms in monopolistic competition. They don’t feel like it. Advertisements increase firm costs, and the increase in demand may not justify these costs. Advertising can be deceptive and firms don’t want to lie to their customers.
Essentials of Economics (MindTap Course List)
8th Edition
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter13: Firms In Competitive Markets
Section: Chapter Questions
Problem 8PA
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1.What is the primary mechanism that allows
Changes in the price of substitutes and complements
Firms freely enter or exit the market when it is in their interest to do so
Changes in consumer tastes
Changes in production technology
2.
Which of the following is true?
Marginal cost curves are always downward sloping.
A monopolist can set their price as high as they want without decreasing their sales.
Firms have no fixed costs in the long run.
A monopoly is a market in which many competitors sell identical goods.
3.
Firms in
Advertising is almost never effective for firms in monopolistic competition.
They don’t feel like it.
Advertisements increase firm costs, and the increase in demand may not justify these costs.
Advertising can be deceptive and firms don’t want to lie to their customers.
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