The competitive firm is a "price taker" and therefore a quality adjuster of product quality. That is, the firm might downgrade or upgrade product quality in response to entry or exiting in the marketplace.
a. true
b. false
Answer: b. false
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Figure 19-2
In Figure 19-2, the derived demand curve is the line
A. ABCD. B. CDEF. C. DEF. D. ABCDEF.
A development bank
(a) accepts deposits from the poor. (b) makes loans for industry expansion. (c) is an agency such as the World Bank. (d) all of the above. (e) none of the above.
The difference between price and average total cost is
A. marginal costs. B. an irrelevant quantity. C. average profit. D. total costs.
Related to the Economics in Practice on page 102: Which of the following best explains why demand is often more elastic in the long run than it is in the short run?
A. Consumers tend to postpone making purchasing decisions as long as possible. B. In the short run, prices can change rapidly, but in the long run they are more stable. C. When demand is elastic, price increases reduce revenue because a small price increase will lead to a large decrease in quantity demanded. D. In the long run, consumers have greater access to substitutes.