Perfectly competitive firms produce up to the point where the price of the good equals the marginal cost of producing the last unit. This condition is referred to as
A) allocative efficiency. B) constant returns to scale.
C) perfectly competitive efficiency. D) productive efficiency.
A
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A Federal Reserve publication proclaimed that "Trade is a win-win situation for all countries that participate." This statement is
A) false since it ignores the workers who lose their jobs as result of international trade. B) true because all consumers and workers benefit from international trade. C) false since not all countries participate in international trade. D) true because it refers to countries; individuals may be losers as a result of international trade.
A wheat farmer and a firm in a perfectly competitive market are similar in that
A) both will earn an economic profit if their total revenue equals their total cost. B) both face vertical demand curves. C) both have to lower their prices if a rival firm lowers its price. D) both face horizontal demand curves.
Refer to Figure d, which illustrates a game played by Travis and Darren. Travis's dominant strategy is:
A. North.
B. South.
C. East.
D. West.
Manny's Bar-n-Grill is next door to a franchised fast-food restaurant near a busy freeway exit. Essentially, the menus, food quality, atmosphere, and service are equal at the two restaurants. Nevertheless, the nationally franchised restaurant can attract more customers, even though its prices are higher. This situation
a. indicates that people are irrational because it never makes sense to pay a higher price when a product is cheaper elsewhere. b. is one in which the national franchise provides uninformed consumers with valuable information that reduces their risk of being unsatisfied with the purchase. c. reflects the greater elasticity of supply for food at Manny's Bar-n-Grill relative to the nationally franchised restaurant. d. is inconsistent with the basic postulates that underlie the economic way of thinking.