If a perfectly competitive firm manufacturing chairs decides to produce 100 more chairs, what happens to the market price of a chair?
What will be an ideal response?
The price will not change. Any one perfectly competitive firm is such a small part of the market that a change in its output has virtually no effect on the price. This result is why the firm's marginal revenue equals its price: No matter how much (or how little) the firm produces, the marginal revenue from one more unit always equals the price of the product.
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Which of the following is a feature of an M-Form organization?
a. divisions can respond more easily to changes in customer demand b. it is difficult to maintain customer relationships c. coordination across divisions is simple and does not take much management time d. evaluating employees is easier because managers typically are similarly trained
Suppose a monopsonist wants to hire more workers. If it has to pay the same wage to all of its workers, the:
a. marginal factor cost will fall while the wage will rise. b. wage will fall while the marginal factor cost will rise. c. difference between the wage and marginal factor cost will become smaller. d. difference between the wage and the labor supply curve will increase. e. wage and the marginal factor cost will increase.