The term price taker is used to describe a situation in which consumers have no influence over the market price for a good or service and must take whatever price is set by the economically powerful firms
a. True
b. False
B
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When and under what circumstances is intervention in international trade justified on market correction grounds? What preconditions would have to be met from the government side for there to be a reasonable likelihood of success?
What will be an ideal response?
Can a production function with two factors exhibit increasing returns to scale while at the same time have diminishing returns to each factor?
What will be an ideal response?
The tendency for an increase in the economic activity of one country to lead to a worldwide increase in economic activity is the
A. trade feedback effect. B. trickle-down effect. C. multiplier effect. D. spontaneous growth effect.
In 1 hour, Robinson Crusoe can either shoot 4 birds or catch 4 fish. A typical native on a nearby island can either shoot 5 birds or catch 10 fish in an hour's time. Which of the following is true according to the doctrine of comparative advantage?
a. Crusoe will be better off if he specializes in either activity and then trades with the natives. b. The natives have a comparative advantage in both shooting birds and catching fish, so Crusoe cannot make himself better off by trading with the natives. c. Crusoe should concentrate on shooting birds and then trade with the natives to obtain fish. d. Crusoe should spend his time catching fish, and he should trade with the natives to obtain birds.