Give a complete but concise definition of the following terms
a. perfect competition
b. perfectly competitive firm's demand curve
c. shutdown point
d. long-run equilibrium in perfect competition
a. Perfect competition is a market structure in which there are many small firms each selling a homogeneous product, with freedom of entry and exit and complete information.
b. The perfectly competitive firm's demand curve is horizontal, which means it can sell as much as it wishes at the prevailing market price.
c. The shut-down point for the firm in the short run is the output point where average revenue is less than average variable cost.
d. Long-run equilibrium for the perfectly competitive firm is an output level such that P = MC = AC and economic profit is zero.
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Frictional unemployment
A) includes discouraged workers. B) is voluntary part-time unemployment. C) is unemployment associated normal labor turnover. D) is unemployment associated with declining industries.
A consumer values a car at $30,00 . and a producer values the same car at $20,000 . If the transaction is completed at $24,000 . the transaction will generate:
a. No surplus b. $4,00 . worth of seller surplus and unknown amount of buyer surplus c. $6,00 . worth of buyer surplus and $4,00 . of seller surplus d. $6,00 . worth of buyer surplus and unknown amount of seller surplus
How long is the long run?
A. A defined, set period of time, usually a year B. However long it would take a firm to vary all of its costs C. However long it would take a firm to have at least one variable cost D. None of these defines the long run.
Consumers do NOT buy as many units of each good as they want because
A. they do not know what they want in all situations. B. of the law of diminishing marginal utility. C. they have limited incomes. D. eventually marginal utility equals zero.