All of the following are true regarding perfectly competitive price determination EXCEPT
A. the individual firm takes the market price as given.
B. the individual firm is known as a market price maker.
C. the individual firm's marginal revenue curve is horizontal at the market price.
D. the market price is determined by the interactions among all buyers (households) and firms.
Answer: B
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Starting from long-run equilibrium, an increase in autonomous investment results in ________ output in the short run and ________ output in the long run.
A. lower; potential B. higher; higher C. lower; higher D. higher; potential
Figure 4-16
Assume that Figure 4-16 shows the supply of new houses. An improvement in the technology for building houses will shift supply from
a.
S1 to S2.
b.
S2 to S1.
c.
S3 to S2.
d.
S3 to S1.
The marginal propensity to consume is
A. disposable income divided by consumption. B. the change in consumption divided by the change in disposable income. C. consumption divided by disposable income. D. the change in disposable income divided by the change in consumption.
St. Charles Hospital, located in an upper-income neighborhood of a large city, recently received a restored mansion as a gift from an appreciative patient. The board of directors decided to remodel the mansion and use it as recuperative quarters for patients willing to pay for luxurious accommodations. The cost to the hospital of using the mansion includes
A. nothing because it was a gift. B. how much the hospital pays for upkeep--taxes, insurance, utilities, maintenance, etc. C. how much the hospital would receive if it rented or sold the mansion. D. both b and c