What are the characteristics of perfect competition?
What will be an ideal response?
Perfectly competitive industries have many firms, a homogeneous product, no barriers to entry, and demand is perfectly elastic.
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A perfectly competitive firm finds that: Average total cost is $25; Average variable cost is $15; Marginal cost is $20 and increasing; Price of the product is $22. This firm should
a. produce more output b. raise the price of its product c. reduce production without shutting down d. shut down (reduce output to zero) e. do nothing (it is currently maximizing profit)
OPEC is able to raise the price of its product by
a. tying. b. setting production levels for each of its members. c. increasing the supply of oil above the competitive level. d. imposing resale price maintenance agreements on members.
If the nominal wage is $12 per hour and the price level (as measured by a price index) is 2, it follows that the real wage is _________ per hour
A) $24.00 B) $6.00 C) $2.50 D) $14.00. E) none of the above
Which of the following models is used quite often to capture decreasing or increasing marginal effects of a variable?
A. Models with logarithmic functions B. Models with quadratic functions C. Models with variables in level D. Models with interaction terms