Perfectly competitive markets are efficient because
A. the long run equilibrium assures that the prices of resources will not increase.
B. they always reach equilibrium.
C. the cost to society for producing the goods is exactly equal to the value that society places on the good.
D. firms in the market are price takers.
Answer: C
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Refer to the figure below. In response to gradually falling inflation, this economy will eventually move from its short-run equilibrium to its long-run equilibrium. Graphically, this would be seen as
A. long-run aggregate supply shifting leftward B. Short-run aggregate supply shifting downward C. Aggregate demand shifting rightward D. Aggregate demand shifting leftward
In the above figure, if the budget line shifts from RT to RS, the substitution effect is illustrated by the move from
A) a to b. B) a to c. C) b to c. D) T to S.
The optimal bidding strategy for an oral auction is
a. To shade your bid below your true value and drop out well before it is reached b. To shade your bid below your true value and drop out just when the shaded amount is reached c. To drop out when the bidding exceeds your true value d. To size up your competition to determine how much to shade your bid
Which of the following would make the equilibrium real interest rate increase and the equilibrium quantity of funds decrease?
a. The demand for loanable funds shifts right. b. The demand for loanable funds shifts left. c. The supply of loanable funds shifts right. d. The supply of loanable funds shifts left.