The behavior of the perfectly competitive firm
A. theoretically leads to an inefficient allocation of resources.
B. maximizes the benefits to consumers, given the resources available to the economy.
C. reduces output in order to raise prices in the short term.
D. results in excess capacity and inefficiency.
Answer: B
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In an economy without government or a foreign sector the equilibrium level of output occurs when
A) actual saving equals actual investment. B) actual saving equals desired investment. C) desired saving equals desired investment. D) desired saving equals actual investment.
In a perfectly competitive industry, influence over price is exerted by: a. individual sellers
b. individual buyers. c. the largest firms. d. the forces of market supply and demand.
Which of the following is not true of monopolistic competition?
a. There are a large number of buyers and sellers. b. The firms produce differentiated products. c. There exists free entry and exit of firms. d. Each of the firms faces a horizontal demand curve. e. Each of the firms acts as a mini monopoly in the market.
Will the national debt have to be paid off (i.e., reduced to zero) in the future? a. No, it can continually be refinanced
b. Yes, if it is not paid off, the U.S. Treasury will have to file for bankruptcy. c. No, technically, it is not a contractual obligation of the federal government. d. Yes, but since most of the debt is held by Federal Reserve Bank, its re-payment would merely involve an accounting transaction between the Fed and the Treasury.