What four conditions define a perfectly competitive market?
What will be an ideal response?
The four conditions are that:
a. many firms sell an identical product to many buyers.
b. there are no restrictions on entry into (or exit from) the market.
c. established firms have no advantage over new firms.
d. sellers and buyers are well informed about prices.
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Refer to the scenario above. Which of the following will happen in equilibrium if Harry is known to be trustworthy?
A) Tom will trust Harry and Harry will cooperate. B) Tom will trust Harry and Harry will defect. C) Neither of them will make any money. D) Only Harry will make money.
A game in which any gains by the group are exactly offset by equal losses by the end of the game is called the
A) negative-sum game. B) zero-sum game. C) positive-sum game. D) cooperative game.
Suppose that in a perfectly competitive market, the market price is $10. A firm in that market has marginal cost of $10, average total cost of $12, and it is producing 100 units. The firm is
A. earning zero total economic profits and is not maximizing economic profits. B. incurring $200 in total economic losses and is minimizing economic losses. C. earning $1,000 in total economic profits and is maximizing economic profits. D. earning $200 in total economic profits and is maximizing economic profits.
The inelastic demand for agricultural products means that a(n):
A. Decrease in price will increase farm incomes B. Increase in price will decrease farm incomes C. Decrease in price will decrease farm incomes D. Increase in price will not change farm incomes