Which of the following statements is true?
A) The total cost of production in a perfectly competitive market can be minimized only when the marginal costs across firms in the market are different.
B) When a competitive market is allowed to operate efficiently, firms end up producing goods using the least amount of scarce resources.
C) Under a perfectly competitive framework, a ruling authority is essentially required to dictate goals for the betterment of society.
D) A firm interested in maximizing profits in a perfectly competitive market will produce output at a level where marginal revenue is equal to the price and greater than the marginal cost.
B
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Consider the above figure. Autonomous consumption, in this scenario, is equal to
A) $30. B) $80. C) $60. D) $40.
When all workers who want jobs have them and the demand for and supply of labor are in equilibrium,
A) the unemployment rate will be zero. B) unemployment is at its natural rate. C) the economy will be experiencing high rates of inflation. D) frictional unemployment will be zero.
The conflict between the Vice President of Marketing and her sales staff arises because
a. the sales staff are too willing to offer discounts b. the Vice President does not want to negotiate aggressively enough c. the sales staff want to negotiate too aggressively d. the Vice President is more willing to offer discounts to make the sale
You are engaged in a debate with a behavioral economist who argues that the philosophy of traditional economics is based on a lie: that all consumers are rational. He argues that since all consumers are sometimes irrational, all of the principles of traditional economics must be thrown out. How would you refute his claim? Identify at least one way consumers behave irrationally and at least one way that a principle of traditional economics can still be successfully applied to consumers.
What will be an ideal response?