If the economy were truly made of industries that fit the textbook definition of perfect competition what do you expect would be a major disadvantage of this from the consumer's perspective?
What will be an ideal response?
One of the assumptions of perfect competition is that the products are all homogeneous. This would clearly reduce product variety across industries and eliminate consumer choice.
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Which of the statements below does not describe a demand curve that is unit elastic?
a. The percentage change in the quantity demanded = percentage change in product price. b. An increase in product price will not change total revenue. c. The price elasticity of demand equals one. d. A change in price does not change quantity demanded. e. A decrease in product price will not change total revenue.
The full-employment level of real GDP is the level which can be produced with:
a. both given technology and productive resources, and cyclical unemployment equal to zero. b. both given technology and productive resources, and frictional and structural unemployment equal to zero. c. given technology and productive resources. d. frictional and structural unemployment equal to zero. e. cyclical unemployment equal to zero.
For a fixed target real interest rate and target inflation rate, when inflation increases, the Fed ________ interest rates, hence ________ short-run equilibrium output.
A. decreases; decreasing B. increases; increasing C. increases; decreasing D. decreases; increasing
Economists assume people are motivated by
A) unlimited resources. B) pride. C) self-interest. D) social justice.