The behavior of the perfectly competitive firm:
a. theoretically leads to an inefficient allocation of resources
b. maximizes the benefits to consumers, given the resources available to the economy.
c. reduces output in order to raise prices in the short-term.
d. results in excess capacity and inefficiency.
b
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A drop in the user cost of capital will lead to an equal ________ in the MPK of profit-maximizing firms, requiring a ________ v*, thus ________ gross investment
A) drop, higher, boosting B) drop, lower, dampening C) drop, lower, boosting D) rise, higher, dampening E) rise, lower, boosting
Many used car owners and used car dealers describe their different cars for sale in the local newspapers and list their asking price. Many people shopping for a used car consider the different choices listed in the paper
The market for used cars could be described as A) relatively competitive. B) perfectly competitive. C) non-competitive. D) having high transaction costs.
A firm is currently producing at the point where MC = MR. The situation for the firm at this point is P = $5, Q = 100, ATC = $6, AVC = $4.50. What do you recommend this firm do?
A) Increase production above the current output rate, because MC = MR at this rate of output. B) Continue to produce the current output rate, because P > AVC. C) Shut down, because AVC > P. D) Shut down, because ATC > P.
Consider the market for Hewlett-Packard printers, depicted in the figure to the right, where the supply of HP printers has increased from S1 to S2. What would cause the supply curve for HP printers to shift to the right?
A. a decrease in the price of a substitute in production B. a decrease in the price of an input C. a higher expected future price for HP printers D. both A and B E. all of the above