Why is a firm in perfect competition a price taker?
What will be an ideal response?
One firm's output is a perfect substitute for another firm's output and each firm is a small part of the market. These points imply that each firm cannot unilaterally influence the market price at which it can sell its good or service. It must accept, or "take" the market equilibrium price—hence the term, price taker.
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Adoption of a currency board
A) is one method for achieving a soft peg policy. B) places responsibility for exchange rate management in the hands of an agency that is independent of political influences. C) mandates the use of currency in all domestic transactions. D) requires that a centralized institution holds interest-bearing assets denominated in the currency against which the nominal exchange rate is being fixed.
In the above figure, the competitive firm will employ the quantity of labor
A) equal to Lc. B) equal to Lb. C) less than Lb. D) greater than Lc.
The equation for aggregate expenditure can be written as:
A. C+I+GDP B. C+Inventory+G+NX C. C+I+G+NX D. C+I+G+Exports
At the intersection of the aggregate supply and aggregate demand curves, the economy is experiencing:
A. Full employment. B. Macro equilibrium. C. Low levels of inflation. D. Population growth.