Why do economists prefer to use the model of perfect competition in most economic analysis?
Economists have three main uses for the model. First, its assumptions are reasonably close to actual conditions in some markets. Second, if a market satisfies some but not all of the assumptions, we often start from perfect competition and then see what happens when we replace the usual assumptions with more realistic ones. Third, the perfectly competitive market is a standard for analyzing consumer and producer benefits.
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The table above shows the demand and costs for a single-price monopolist. When it maximizes its profit, the firm makes an economic profit of
A) $15. B) $25. C) $40. D) $45.
In the above figure, the long-run average cost curve exhibits diseconomies of scale
A) between 5 and 10 units per hour. B) between 10 and 20 units per hour. C) between 20 and 25 units per hour. D) along the entire curve.
Researchers find that the income elasticity of poultry demand in Indonesia is 1.2. This implies that if income is expected to grow at 5%, then projected demand for poultry will:
a. Increase by 5% b. Increase by 6% c. Increase by 6.2% d. Increase by 4.2%
Ceteris paribus, if the French decide they want to drink more Chinese-grown tea, this causes the ________ Chinese currency to ________.
A. supply of; decrease B. demand for; decrease C. demand for; increase D. supply of; increase