Which of the following is a characteristic of perfect competition?
A. Large barriers to entry.
B. A small number of firms.
C. Firms selling unique goods.
D. None of the alternatives are characteristics of perfect competition.
Answer: D
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A firm uses two inputs, A and B. At its optimal choice of input proportions,
A. MRP of A = MRP of B. B. MRPA/PA= MRPB/PB. C. MPP of A = MPP of B. D. All of the responses are correct.
In Figure 1 below if the economy were at Y2 then we would expect there to be:
A. a reduction in inventories.
B. an increase in inventories.
C. no change in inventories.
D. an increase in consumption spending.
Which of the following provides the best explanation for diseconomies of scale?
A. Increased specialization B. Indivisible setup costs C. Diminishing marginal productivity D. Monitoring costs
State and local governments
A. accurately account for their pension liabilities. B. understate the present value of their pension liabilities by using a discount rate that is too high. C. overstate the present value of their pension liabilities by using a discount rate that is too low. D. understate the present value of their pension liabilities by using a discount rate that is too low.