Which of the following statements best reflects a price-taking firm?
a. If the firm were to charge more than the going price, it would sell none of its goods.
b. The firm has an incentive to charge less than the market price to earn higher revenue.
c. The firm can sell only a limited amount of output at the market price before the market price will fall.
d. Price-taking firms maximize profits by charging a price above marginal cost.
a
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Interest rates in the economy have risen. How will this affect aggregate demand and equilibrium in the short run?
A) Aggregate demand will rise, the equilibrium price level will fall, and the equilibrium level of GDP will rise. B) Aggregate demand will fall, the equilibrium price level will rise, and the equilibrium level of GDP will fall. C) Aggregate demand will fall, the equilibrium price level will fall, and the equilibrium level of GDP will fall. D) Aggregate demand will rise, the equilibrium price level will rise, and the equilibrium level of GDP will rise.
Suppose you have spent your entire budget and for all the goods you purchase the marginal utilities per dollar spent are identical. Which of the following is true?
a. You are being irrational. b. You can increase your utility by reallocating your income. c. You will reduce your utility if you allocate income in any other way. d. You are minimizing your marginal utility. e. You can avoid diminishing marginal utility.
In order to "defend" its overvalued currency, Argentina in 2002 had to reduce its
a. interest rates. b. tax levels. c. holdings of foreign reserves. d. balance of payments surpluses.
The purpose of the Freedom to Farm Act of 1996 was to:
A. immediately end U.S. farm subsidies. B. end 60 years of U.S. price supports for American grain crops. C. eliminate U.S. tariffs and quotas on imported farm goods. D. stabilize short-run crop prices.