The perfectly competitive model makes a lot of fairly unrealistic assumptions. Why do economics text books still talk a lot about this model?
A) Many markets are close to being perfectly competitive.
B) It is an important model to use as a benchmark to compare other markets structures to.
C) Perfectly competitive markets maximize societal welfare.
D) All of the above.
D
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Why don't some firms in monopolistic competition earn losses in the long run?
A) The firms have enough monopoly power to ensure they always earn profits. B) Free entry allows enough firms to remain in the market and maintain the critical mass of firms required to attract customers. C) Free exit implies that any unprofitable firms leave the market in the long run. D) In the long run, firms will build enough brand loyalty among customers to ensure a profitable level of sales.
Which of the following is a final good or service?
a) a haircut purchased by a father for his 12 year-old son b) fertilizer purchased by a farm supplier c) diesel fuel bought for a delivery truck d) Chevrolet windows purchased by a General Motors assembly plant
Whether in a natural monopoly or a simple monopoly, the regulated price of electricity is theoretically supposed to be set where
A. marginal cost equals zero. B. there is no accounting profit. C. there is no economic profit. D. marginal revenue is zero.
Explain the relationship between the minimum wage and the unemployment rate for teenagers.
What will be an ideal response?