There are four structural components to a perfectly competitive market. Which one of the four components is the most important to market operation and why?
What will be an ideal response?
The four structural components to a perfectly competitive market are a large number of buyers and sellers, product homogeneity, rapid dissemination of accurate information at low cost, and free entry into and free exit from the market. The large number of buyers and sellers is very important for market operations because competition from a large number of agents is needed for a price-taking behavior in a competitive market. Price-taking behavior occurs when each agent acts as if his or her actions have no effect on the market price.
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The demand curve any monopolist uses in making output decisions is:
a. the same as the demand curve facing a perfectly competitive firm. b. vertical, because there are no close substitutes for its product. c. horizontal, because there are no close substitutes for its product. d. the same as the market demand curve. e. perfectly inelastic.
Which of the following statements are false?
A. If the CPI has gone up since the base year, inflation has occurred. B. Inflation generally occurs before wars. C. A period of great price stability since World War II was 1958 to 1964. D. Inflationary recessions first occurred in the 1970s.
What is the difference between a firm's assets and its liabilities?
What will be an ideal response?
Wealth taxes are assessed on a stock of assets instead of a flow such as income or sales.
A. True B. False C. Uncertain