Bethany decides to build a chicken coop, get some chickens, and start selling fresh eggs in her neighborhood. This example describes which of the following characteristics of perfect competition?
A. large number of small firms
B. homogeneous goods
C. very easy entry and exit
D. imperfect information
Answer: C
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Scooters and bicycles are substitutes. Suppose that the price of a bicycle falls. Which of the figures above best illustrates how this fall in price affects the demand curve for scooters?
A) Figure A B) Figure B C) Figure C D) Figure D E) None of the above answers is correct because the change in the price of a bicycle will affect the supply curve not the demand curve.
What is cost-plus pricing? Why do some firms use cost-plus pricing even when the firms' managers have the resources to devise a pricing strategy that would result in greater profits?
What will be an ideal response?
In an oligopoly, when the quantity effect outweighs the price effect:
A. an increase in output may increase the firm's profits. B. a decrease in output may increase the firm's profits. C. keeping output constant and raising price will increase the firm's profits. D. keeping output constant and lowering price will increase the firm's profits.
In April 1991, Argentina adopted a currency board primarily to address the problem of:
A. triple-digit inflation. B. high interest rates. C. large trade surpluses. D. slow growth.