The equilibrium price of a good or service in a competitive market is
A. Lower than it should be because bankruptcies are common in competitive markets.
B. Higher than the opportunity cost of producing the product.
C. A reflection of the opportunity cost of producing the product.
D. Higher than it should be because profits are included in the price.
Answer: C
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The above figure shows the supply and demand curves for high-skilled and low-skilled labor. Low-skilled workers earn a wage rate of
A) $15 per hour. B) $12 per hour. C) $9 per hour. D) $6 per hour.
Refer to the above figure. Which panel demonstrates the law of demand?
A) Panel A B) Panel B C) Panel C D) Panel D
Suppose that a worker in Country A can make either 10 iPods or 5 tablets each year. Country A has 100 workers. Suppose a worker in Country B can make either 2 iPods or 10 tablets each year. Country B has 200 workers. Suppose Country B's population of workers increased to 600. We can say:
A. Country B now possesses the absolute advantage in the production of both goods. B. Country B now possesses the absolute advantage in tablets only. C. Country B now has the comparative advantage in iPod production. D. Country B has no need to trade now.
Which of the following would move the economy up and to the left along a short run Phillips Curve? a. Increases in the discount rate and increases in the interest rate the Fed pays on bank reserves
b. Increases in taxes by the federal government combined with reductions in government purchases of goods and services. c. Decreases in the fed funds interest rate target adopted by the Fed. d. An increase in the expected rate of inflation.