In a perfectly competitive market, individual production decisions have no impact on the market. Why does this happen?
a. The industry is unchangeable and thus impervious to outputs.
b. The industry is unpredictable and thus resistant to outputs.
c. The industry is huge and, in comparison, each firm is very small.
d. The industry is small and, in comparison, each firm is huge.
c. The industry is huge and, in comparison, each firm is very small.
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Which of the following would most likely NOT be included in the liquidity approach to defining the money supply?
A) savings deposits B) money market mutual fund accounts C) corporate bonds D) traveler's checks
The efficient transfer price is
a. the upstream division's average cost b. the upstream division's marginal cost c. the downstream division's average cost d. the downstream division's marginal cost
The federal government deficit or surplus
A. is not affected by the level of GDP. B. is not affected by discretionary fiscal policy. C. may be more a symptom of economic distress than a result of intentional fiscal policy. D. should be balanced at all times to prevent business cycles.
Jan's Dry Cleaning holds $10,000 on a typical day, although only $2,000 is essential for carrying out business. Making a midday deposit is estimated to reduce cash holdings to $8,000 and cost an extra $80 per year in lost production. If, in addition, an armored car service is engaged to pick up cash more frequently for a fee of $120 per year, cash holdings will be further reduced to $6,000 per day. Employing a computerized cash management service for an annual fee of $180 would reduce cash holdings further to $4,000. If any reduction in cash holdings will be used to purchase government bonds earning 5%, then how much money should Jan's hold?
A. $6,000 B. $10,000 C. $8,000 D. $4,000