Which is FALSE about perfect competition?
A. Market entry and exit is unrestricted.
B. There is no ability to set price.
C. There is considerable product differentiation.
D. There are numerous sellers.
Answer: C
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The branch of economics that focuses on decision making for the economy as a whole is called:
a. normative economics. b. macroeconomics. c. microeconomics. d. consumer economics.
If a decrease in the price of movie tickets increases the total revenue of movie theaters, this is evidence that demand is:
a. price elastic. b. perfectly inelastic. c. unit elastic with respect to price. d. price inelastic.
A union wants to increase its members’ wages without reducing employment. Which of the following strategies might achieve that goal?
A. Setting a high minimum wage rate for its members B. Increasing the number of members in the union C. Pushing employers not to allow featherbedding of workers D. Training its members to work more productively
Suppose there are ten people playing cards in a room. One of them wants to smoke a cigar, nine of them dislike the smell of cigar smoke. The smoker values the privilege of smoking at $5, and each of the other nine people of the room would be willing to pay fifty cents for clean air in the room. The rules governing use of the room state that smoking is not allowed unless everyone agrees to allow smoking. Declaring the card room a non-smoking area with no opportunity to negotiate would:
A. increase total economic surplus. B. leave total economic surplus unchanged, but redistribute benefits. C. decrease total economic surplus. D. efficiently solve the externality problem.