The Administrative Burden of Regulating Price in a Monopolistically Competitive

question 25

Multiple Choice

The administrative burden of regulating price in a monopolistically competitive market is

• A)small due to economies of scale.
• B)large because price is usually below marginal cost.
• C)large because of the large number of firms that produce differentiated products.
• D)small because firms produce with excess capacity.

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Definitions:

Rational Expectations Theorists

Economists who believe that individuals make predictions about the future based on all available information, thus affecting their economic decisions.

Downwardly Flexible

Refers to the ability of wages or prices to decrease in response to market conditions.

Anti-Recession Policies

Government measures intended to combat economic downturns, involving fiscal and monetary actions to stimulate the economy.

Equation of Exchange

An economic equation that describes the relationship between the money supply, velocity of money, price level, and an economy's output.