If the ice cream industry is monopolistically competitive, then: ...

[dmcintosh]

If the ice cream industry is monopolistically competitive, then:
 a. the price of ice cream equals marginal cost in equilibrium.
 b. the price of ice cream equals average cost in long-run equilibrium.
  c. the price of ice cream is less than marginal cost in equilibrium.
  d. there are significant barriers to entering the ice cream business.

Question 2

Assume an Australian importer expects to pay 16,000 Australian dollars (AUD) for 8,000 worth of U.S. goods, but on the shipment date 30 days later, the same volume of U.S. goods costs the Australian importer only 10,000 Australian dollars. This means that between the contract date and the payment date, the exchange rate has changed:
 a. from 1 = 1.25 AUD to 1 = 2.0 AUD.
  b. from 1 = 2.0 AUD to 1 = 1.25 AUD.
  c. from 1 = 0.8 AUD to 1 = 0.5 AUD.
  d. from 1 = 0.5 AUD to 1 = 0.8 AUD.
  e. from 1 = 0.5 AUD to 1 = 2.0 AUD.

[amcvicar]

Answer to Question 1

b

Answer to Question 2

b