Which of the following correctly explains why sellers in a perfectly competitive market are price takers?
a. There are few sellers, and so they have the power to take whatever price they want.
b. There are many sellers, and so the market process generates an equilibrium price that cannot be influenced by any one seller. Thus they have no choice but to take the price generated by the market process.
c. Sellers in a competitive market have the power to influence price by colluding with one another and using quotas to limit overall market output and thus raise price.
d. Individual buyers in a competitive market have the power to influence price, and thus can impose prices and other conditions on powerless sellers.
b
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The creation of a lender of last resort in the United States
A) occurred in response to banking panics. B) was mandated in the U.S. Constitution. C) occurred in response to the S&L crisis of the 1980s. D) has been recommended by the Treasury in its report of late 1992.
A positive economic statement simply describes what is
a. True b. False Indicate whether the statement is true or false
Suppose that a firm in an industry subject to diminishing returns to scale is initially in long run equilibrium. Which of the following will not be part of the industry adjustment process to a permanent increase in demand? a. Some firms will temporarily make economic profits
b. Some new firms will enter. c. The long run equilibrium price will be higher than the initial equilibrium price. d. All of the above will be consequences.
In a market for emission permits, firms that emit over their allowed limits
A. must buy more allowances through a trading system. B. are forced to shut down. C. are taxed by the government for the amount of emissions. D. will sell their excess allowances through a trading system.