Which of the following is NOT a characteristic of perfect competition?
A. Products are homogeneous.
B. Buyers and sellers have equal access to information.
C. There are many buyers and sellers.
D. Each firm determines the market price of its product.
Answer: D
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A baker can produce two products: cupcakes and pies. The table below is the baker's production possibilities schedule:Production Possibilities ScheduleProductABCDEFCupcakes01220365681Pies1086420A change from combination C to B means that
A. 8 cupcakes were given up to make 2 pies. B. 2 pies were given up to make 20 cupcakes. C. 8 cupcakes were given up to make 1 pie. D. 6 pies were given up to make 20 cupcakes.
A free-rider problem occurs when the
A) good is excludable. B) good is offered at no charge. C) good is rival. D) good is nonexcludable.
Profit maximization occurs where
A) each factor is used up to the point where its marginal revenue product is equal to its marginal factor cost. B) each factor is used up to the point where its marginal physical product is equal to its marginal factor cost. C) average variable cost equals marginal cost. D) average variable cost equals average total cost.
An increase in the price of a product
A. increases productivity. B. automatically increases wages. C. would probably decrease total revenues. D. raises the firm's demand for labor.