Why are perfectly competitive markets considered efficient?
What will be an ideal response?
Perfectly competitive markets are forced to be efficient by free entry and exit. Competitive firms produce at the minimum point on their average cost curve, produce where price equals marginal cost, and have zero economic profits.
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When the price of Nike soccer balls decreased, Ronaldo purchased more Nike soccer balls and fewer Adidas soccer balls. Which of the following best explains Ronaldo's decision to buy more Nike soccer balls?
A. An increase in the demand for Nike soccer balls B. The price effect C. The income effect D. The substitution effect
In perfect competition, the marginal revenue of an individual firm
A) is zero. B) is positive but less than the price of the product. C) equals the price of the product. D) exceeds the price of the product.
An increase in the price of raw materials will shift both the MC and the ATC curves upward
a. True b. False Indicate whether the statement is true or false
Monopolistic competition leads to ___________ prices, but ___________ product variety.
Fill in the blank(s) with the appropriate word(s).