Perfect competition is characterized by all of the following EXCEPT
A) a large number of buyers and sellers.
B) no restrictions on entry into or exit from the industry.
C) considerable advertising by individual firms.
D) buyers and sellers are well informed about prices.
E) firms produce an identical product.
C
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The self-correcting property of the economy means that output gaps are eventually eliminated by:
A. increasing or decreasing potential output. B. government policy. C. decreasing inflation only. D. increasing or decreasing inflation.
A strategy of setting price below the monopoly profit-maximizing price but at the highest level that will still result in a loss for a potential entrant into the market is known as
A) entry pricing. B) contestable pricing. C) limit pricing. D) unlimited pricing.
If Slovenia were a large country in world trade, then if it imposes a large set of tariffs on its imports, this must
A) decrease the internal price of imports below the world market rate. B) cause retaliation on the part of its trade partners. C) harm Slovenia's real income. D) improve Slovenia's real income. E) improve the real income of its trade partners.
Now suppose competition among several market makers forces the spread down to $4 . How many goods are traded?
a. Four b. Five c. Six d. Seven