Which of the following is a requirement for a perfectly competitive market?
A. Sellers maximize sales.
B. There are barriers to entry.
C. Buyers and sellers are price takers.
D. There are indivisible setup costs.
Answer: C
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The theory of investment that emphasizes the role of expected growth in real GDP on investment spending is known as
A) the theory of animal spirits. B) the accelerator theory. C) real business cycle theory. D) the multiplier theory.
Given that the own-price elasticity of demand for shoes is -2.6, if the price of shoes rises by 8%, what will happen to the quantity of shoes demanded?
a. It will decrease by 20.8% b. It will increase by 20.8% c. It will decrease by 2.6% d. It will decrease by 2.6%
Assume the market for ball bearings is purely competitive. Currently, each of the firms in this market is making a positive level of economic profits. In the long run, we can expect the market:
A. supply to increase. B. supply to decrease. C. demand to decrease. D. demand to increase.
You are a manager in a perfectly competitive market. The price in your market is $14. Your total cost curve is C(Q) = 10 + 4Q + 0.5Q2. What price should you charge in the short run?
A. $16 B. $12 C. $14 D. $18