7. Which of the following characterizes both perfectly competitive and monopolistically competitive markets?
a. Firms face downward sloping demand curves
b. Firms sell differentiated products
c. Firms use advertising extensively
d. In the long-run equilibrium, firms earn zero economic profit
9. Coase Theorem claims that the market can internalize externalities provided:
a. Markets are perfectly competitive
b. Transaction costs are zero, irrespective of how property rights are defined
c. Property rights are well-defined, irrespective of the transaction costs
d. Property rights are well-defined and transaction costs are zero
11. If the nominal interest rate is 10% and the price index rises from 200 to 210, what is the value of the real interest rate?