Ellen's Painting Services is a perfectly competitive firm that currently paints 10 houses a month and charges $100 per house, which is the going market price
Ellen's marginal cost is positively related with the quantity of service she provides and is currently $120. What should Ellen do to increase her economic profit? Paint more houses? Raise her price? Explain your answer.
Ellen should decrease the number of houses she paints until her marginal cost equals the market price. This way she will maximize her profit. As a perfectly competitive firm, Ellen is a price taker and cannot raise or lower her price without losing profit.
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The person on the other side of a transaction is referred to as the:
A) derivator B) counterparty C) hedger D) speculator
The government tries to protect the competitive economic system by passing and enforcing
A) price controls. B) tariff legislation. C) antitrust laws. D) building codes and zoning laws.
Consider the competitive market for oil. Which of the following would result from the discovery of new oil fields that can be profitably accessed at the current price?
a. both b and d b. an increase in the demand for oil c. an excess demand for oil as oil companies shift resources to developing the new fields d. an excess supply of oil if the price of oil fails to drop sufficiently e. an increase in the expected future price of oil
The welfare of sellers is measured by
a. consumer surplus. b. producer surplus. c. total surplus. d. price.