Which of the following is a defining characteristic of all perfectly competitive markets?
A. Consumers display strong brand loyalty.
B. All firms sell the same standardized product.
C. Each firm in the market faces a perfectly inelastic demand curve.
D. The market demand curve is perfectly elastic.
Answer: B
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What will be an ideal response?
When a firm's demand fluctuates randomly,
A) no profit can be earned on the inventory. B) the optimal inventory maximizes the profit of the inventory. C) the profit-maximizing inventory is found where the expected marginal benefit exceeds the expected marginal cost. D) managers cannot use marginal analysis to determine the optimal inventory.