21. There is no incentive for additional producers of an information product to

Question

21. There is no incentive for additional producers of an information product to enter the industry when the price charged for these products by each firm already in the industry is equal to
A) average total cost.
B) average fixed cost.
C) marginal cost.
D) average variable cost.

22. A monopolistic competitor in long-run equilibrium is like a perfect competitor in that
A) zero economic profits are made.
B) price is greater than marginal cost.
C) price equals marginal cost.
D) both produce at the minimum points of their average total cost curves.


24. The demand curve for a monopolistically competitive firm is
A) elastic because the products produced are homogeneous.
B) inelastic because of barriers to entry.
C) elastic because of product differentiation.
D) inelastic because of the profit maximizing behavior of the firm.

25. Which of the following statements is true about the economic profits earned by a monopolistic competitor firm in the long run?
A) Economic profits can be positive since firms have some degree of monopoly power.
B) Economic profits will tend towards zero since positive profits will attract new firms into the industry.
C) Economic profits will be positive since the firm has a downward sloping demand curve.
D) Economic profits can be negative since there is so much competition in the market.

26. A search good is a product
A) that an individual must consume before the quality can be established.
B) with qualities that consumers lack the expertise to assess without assistance.
C) with characteristics that enable an individual to evaluate the product's quality in advance of a purchase.
D) that emphasizes the features of its product.

Explanation / Answer

A,C,B,D,B

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