Which of the following conditions define a perfectly competitive market?
a. The transaction costs are very high.
b. Information is available to participants at a high cost.
c. The product is homogenous.
d. There are limited number of buyers and sellers.
C
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Which of the following statements is true?
A) In a competitive market, the invisible hand encourages the movement of resources from more productive uses to less productive uses. B) In a competitive market, firms in the long run tend to earn positive economic profits. C) Competitive equilibrium provides incentives for entrepreneurs to shift their resources from unprofitable industries to profitable ones. D) At the competitive equilibrium, production occurs at the point of maximum average total cost.
Refer to Figure 21-3. Which of the following is consistent with the graph depicted above?
A) Taxes are changed so that real interest income is taxed rather than nominal interest income. B) Technological change increases the profitability of new investment. C) The government runs a budget deficit. D) An expected recession decreases the profitability of new investment. Figure 21-4