Why doesn't a perfectly competitive firm charge a price slightly higher than the industry price in order to earn extra profit?
A perfectly competitive firm is producing a product that is identical to the output of each of its competitors. Additionally, it is only one firm of many in the market. Thus, no buyer would pay a price above the industry rate in order to buy from one particular firm; instead, the consumer would simply buy from one of the many other firms.
You might also like to view...
All central banks are controlled by government
Indicate whether the statement is true or false
The principle of diminishing marginal utility says that
A) marginal utility is negative as the quantity of the good consumed increases. B) total utility decreases as the quantity of the good consumed increases. C) total utility increases by smaller and smaller amounts as the quantity of the good consumed increases. D) total utility increases by larger and larger amounts as the quantity of the good consumed increases.
Jay and Joyce meet George, the banker, to work out the details of a mortgage. They all expect that inflation will be 2 percent over the term of the loan, and they agree on a nominal interest rate of 6 percent. As it turns out, the inflation rate is 5 percent over the term of the loan
a. What was the expected real interest rate? b. What was the actual real interest rate? c. Who benefited and who lost because of the unexpected inflation?
When economists say goods are scarce, they mean...
What will be an ideal response?