Which of the following is NOT true regarding competitive markets?

The last time gas prices increased drastically, sales of large Sport Utility Vehicles (SUVs) fell. Why?

A. Higher gas prices lowered the benefit of driving an SUV. B. Higher gas prices increased the cost of driving a SUV. C. Higher gas prices lowered the cost of driving a SUV. D. Higher gas prices increased the benefit of driving an SUV.

Answer the following statements true (T) or false (F)

1. If a firm cannot make a profit under conditions of perfect competition, it should shut down as soon as possible. 2. Allocative efficiency occurs when firms are producing the goods consumers most want and consumers pay a price equal to marginal cost. 3. Consumer surplus is the area above the demand curve and below the equilibrium price. 4. Producer surplus is the difference between the price the firm is willing to sell its goods and the price it actually receives.

Suppose a country, whose production and consumption of cell phones is large relative to the world market, has just entered the global market. If the country is a net-importer of cell phones, we would expect:

A. an increase in both world price and quantity of cell phones. B. an increase in world price and decrease in world quantity of cell phones. C. a decrease in both world price and quantity of cell phones. D. a decrease in world price, and increase in world quantity of cell phones.

What determines the productivity growth rates of a country?

A. Amount of working capital currently available B. Rates of increase of capital, technology, and workforce quality C. Current level of gross domestic product D. Current levels of human capital, physical capital, and technology