Why are demand and marginal revenue represented by the same curve for a firm in a perfectly competitive market, but by separate curves for a firm in a monopolistically competitive market?
What will be an ideal response?
A perfectly competitive firm faces a horizontal demand curve and does not have to cut the price to sell a larger quantity, so marginal revenue will always be equal to the selling price, which is represented by the demand curve. A monopolistically competitive firm must cut the price to sell a larger quantity, so its marginal revenue curve will be below its demand curve.
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A backward-bending portion of an individual labor supply curve is most likely to be observed: a. at lower wages
b. at higher wages. c. in manufacturing industries. d. in service industries.
Which of the following factors contribute to economic growth?
a. a decline in the stock of physical capital b. the discovery of new oil reserves c. a decrease in the productivity of labor d. a decrease in the quantity of labor due to emigration
Government bond:
What will be an ideal response?
If a firm perceived that the other firm in an implicit pricing agreement dropped its price in response to a change in market conditions, then its most likely response would be to:
A. match the other firm's price. B. engage in a price war. C. raise price to punish the other firm. D. keep its price the same.