Even if two competitive firms in the same market have different production technologies, they will each earn long-run zero profits. Why?
What will be an ideal response?
The firm that has more productive resources will have the cost of those resources bid up by the marketplace. The more productive the resource, the more expensive it will be. This price is bid up until the firm's profits are zero. The firm with less productive resources will also have zero profits because it is not paying as much for its resources. There is no such thing as a free lunch or a free productivity gain for competitive firms.
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Refer to the data. If the consumer has money income of $52 and the prices of J and K are $8 and $4 respectively, the consumer will maximize her utility by purchasing:
Answer the question on the basis of the following two schedules, which show the amounts of additional satisfaction (marginal utility) that a consumer would get from successive quantities of products J and K.
A. 2 units of J and 7 units of K.
B. 5 units of J and 5 units of K.
C. 4 units of J and 5 units of K.
D. 6 units of J and 3 units of K.
Describe the relationship shown by the investment demand curve.
What will be an ideal response?