A key assumption about the way firms behave is that they
A. maximize revenue.
B. minimize costs.
C. maximize profit.
D. maximize market share.
Answer: C
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Both competitive firms and monopolies produce at the level where marginal cost equals marginal revenue. Then, other things remaining the same, why is price lower in a competitive market than in a monopoly?
What will be an ideal response?
If the market price of the product that employs labor in production increases:
a. the marginal product of labor increases. b. the demand curve for labor shifts to the left. c. the price of labor decreases. d. the marginal revenue product of labor increases. e. the supply curve of labor shifts to the left.
The more liquid markets are the:
A. more people are willing to save, and the higher the amount of investment occurs. B. less people are willing to save, and the higher the amount of investment occurs. C. more people are willing to save, and the lower the amount of investment occurs. D. less people are willing to save, and the lower the amount of investment occurs.
If firms in a competitive price-searcher market are incurring economic losses, which of the following scenarios would best describe the change existing firms (who are able to stay in the market) would face as the market adjusts to long-run equilibrium?
a. An increase in demand for each firm and lower prices. b. A decrease in demand for each firm and lower prices. c. An increase in demand for each firm and higher prices. d. A decrease in demand for each firm and higher prices.