Long-run equilibrium under monopolistic competition is similar to ...

[rlane42]

Long-run equilibrium under monopolistic competition is similar to long-run equilibrium under perfect competition in that:
 a. price equals the minimum average total cost.
  b. firms face perfectly elastic demand curves.
  c. price equals average cost.
 d. marginal revenue equals average cost.

Question 2

Suppose a Canadian investor buys a one-year U.S. government bond that pays 7 percent interest. If the U.S. dollar appreciates 4 percent against the Canadian dollar during the year, what must be the yield on a comparable Canadian government bond for interest rate parity to hold?
 a. 3 percent
  b. 4 percent
  c. 7 percent
  d. 10 percent
  e. 11 percent

[Beatricemm]

Answer to Question 1

c

Answer to Question 2

e