In competitive markets, which of the following is not correct?
a. Firms produce identical products.
b. No individual buyer can influence the market price.
c. Some sellers can set prices.
d. Buyers are price takers.
Answer: c. Some sellers can set prices.
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Assume a firm has the following cost and revenue characteristics at its current level of output: price=$8.00 . average variable cost=$6.00 and average fixed cost =$4.00 . In the long run, the firm
a. Should shut-down as its making a loss of $2 b. Should continue operating as long as it is covering the variable costs of $6 c. Should continue operating as long as it is covering the fixed costs of $4 d. Should not shut down
Think of the characteristics of perfect competition and use them to decide which of the following firms is most likely to belong in a perfectly competitive market
a. pizza restaurant b. cookie producer c. bicycle store d. generic canned peas producer e. corn farm
Suppose you have a money income of $10, all of which you spend on Coke and popcorn. In the diagram, the prices of Coke and popcorn, respectively, are
What will be an ideal response?
To correct for positive externalities the government
A. should create a public good. B. should allow the price system to do the correction. C. can impose a tax. D. can give a subsidy.