What role does the invisible hand play when two firms are producing in the same competitive industry?
What will be an ideal response?
When two firms are producing in the same competitive industry, the managers of both firms will be interested in maximizing individual profits. Although both firms function independently for their own objectives, the total cost of production will be minimized and the total profits across the two firms will be maximized. This happens because both firms produce where marginal cost is equal to price and eventually marginal cost across the firms is equalized. Because both firms are manufacturing at their least-cost output levels, total cost of production is minimized, and social surplus and profit are maximized.
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Which of the following statements is true?
A) The growth rate of manufactured exports from the U.S. exceeded the growth rate of manufactured goods from China in the early 2000s. B) The U.S. economy has failed to meet the demand for manufactured goods domestically. C) U.S. exports are worth more than its imports. D) The import of crude oil by the U.S. has been declining since 1960.
The "invisible hand" refers to the control that government must exercise over a market economy
a. True b. False Indicate whether the statement is true or false
Which of the following theorists believe a decrease in marginal tax rates will increase the incentives to work and invest?
A. Supply-Side Economists B. Phillips Curve advocates. C. Monetarists. D. Keynesians.
In the above figure, assume the economy starts out in equilibrium at point d. If the Fed increases the money supply so that the new aggregate demand curve is AD3, then the new short-run equilibrium will be at point
A. a. B. b. C. c. D. i.