Which of the following is not a reason perfect competition is a useful simplification, despite the diversity of market types we find in the world?
a. Perfectly competitive markets are the easiest to analyze because everyone participating in the market takes the price as given by market conditions.
b. Some degree of competition is present in most markets.
c. There are many buyers and many sellers in all types of markets.
d. Many of the lessons that we learn by studying supply and demand under perfect competition apply in more complicated markets as well.
c
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If firms in a competitive price-searcher market are incurring economic losses, which of the following scenarios would best describe the change existing firms (who are able to stay in the market) would face as the market adjusts to long-run equilibrium?
a. An increase in demand for each firm and lower prices. b. A decrease in demand for each firm and lower prices. c. An increase in demand for each firm and higher prices. d. A decrease in demand for each firm and higher prices.
If Sally Smith creates VCU1 by playing an online game, the effect is to cause the nation's:
a. Monetary base to rise. b. M2 money supply to rise. c. M2 money multiplier to remain the same. d. M2 money multiplier to rise.
If a private good generates external benefits:
A. the social benefit will be greater than the private benefit. B. the social benefit will equal the private benefit. C. the social benefit will equal the private benefit minus the external benefit. D. the external benefit will equal the private benefit plus the social benefit.
What is the source of comparative advantage in the Heckscher-Ohlin model?
What will be an ideal response?