Why are perfectly competitive ranchers in Montana price takers?
What will be an ideal response?
Because one farmer's beef is identical to another farmer's, each farmer's beef is a perfect substitute for all other farmers' beef. In addition, there are over one million ranchers in the United States. As a result, no individual rancher can impact the market price by increasing or decreasing production. Therefore each rancher faces a perfectly elastic demand. Each can sell all of the beef desired at the market price, but not one penny more. Once the market sets the price, the rancher must take as given whatever the price might be.
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Gross Domestic Product (GDP) is the total market value of all
A) final goods and services produced annually within a country's borders. B) final and intermediate goods and services produced annually within a country's borders. C) intermediate goods and services produced annually within a country's borders. D) final goods produced every month within a country's borders.
The argument in favor of regulation for natural monopolies, externalities, and cases of imperfect information is:
A. market failure. B. overallocation of resources to production. C. insufficient economic profits. D. excessive entry of new firms.
Aggregate demand grows because
A. patent laws protect and stimulate new inventions. B. there is more machinery and technology improvement. C. the government increases its spending, a growing population increases consumer spending, and the Fed increases the money supply. D. All of these responses are correct.
Which of the following would cause the equilibrium price of apple juice to decrease and the equilibrium quantity of apple juice to increase?
A) a decrease in the price of apples B) an increase in the price of apples C) an increase in the price of orange juice, a substitute for apple juice D) a decrease in the price of granola bars, a complement for apple juice