What is one of the primary characteristics of perfectly competitive markets?
(A) They have relatively high barriers to entry.
(B) They have relatively high start-up costs.
(C) They are relatively efficient.
(D) They are relatively inefficient.
Ans: (C) They are relatively efficient.
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Refer to the above figure. Suppose the economy's initial equilibrium is represented by the intersection of LRAS2 and AD2
Now there is an increase in labor productivity which increases total planned production at any given price level and aggregate demand remains stable. The resulting change in the economy's long-run equilibrium position would be represented by a A) movement from B to D. B) movement from C to D. C) movement from C to B. D) movement from A to B.
Karl can produce either 10 tons of oranges or 5 tons of apples in a year, while Adam can produce either 5 tons of oranges or 10 tons of apples. Which of the following would be mutually beneficial terms of trade between Karl and Adam?
a. 1 ton of apples per 2 1/2 tons of oranges b. 1 ton of apples per 1 1/2 tons of oranges c. 1 ton of apples per 1/4 ton of oranges d. 1 ton of apples per 1/5 ton of oranges