Does a perfectly competitive producer have any incentive to lower its price so it is below the current market price? Explain your answer
What will be an ideal response?
A perfectly competitive producer has no incentive to lower its price because the producer can sell all he or she produces at the going market price. In this case, a producer will not lower the price he or she charges because no additional sales can be garnered. Hence it is nonsensical to undercut the market price because the lower price means lower revenue and hence lower profit.
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The main advantage of diversification as an investment policy is that it-
What will be an ideal response?
Which of the following statements is true?
A) A budget constraint is the same for a consumer at all levels of income. B) A budget constraint is a function of the income of the consumer and not the prices of the goods and services available for consumption. C) A budget constraint quantifies the trade-offs that economic agents face while making decisions. D) A budget constraint is based on the minimum amount of money that an economic agent can spend on goods and services.