Under perfect competition
A) information about prices is hard to obtain.
B) there is a maximum number of firms that can enter the market.
C) if a firm exits the market, price will rise.
D) transaction costs are low.
D
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Marginal revenue is less than price for
A) all price searchers. B) all price takers. C) price searchers who can't restrict price reductions to the new purchases they want to attract. D) sellers who face inelastic demand curves.
Excess capacity is a characteristic of monopolistically competitive firms. What does excess capacity mean?
A) It means that firms hire more than the minimum number of workers needed to produce the profit-maximizing level of output. B) It means that firms build plants that are not large enough to achieve minimum efficient scale. C) It means that firms do not produce the output level that corresponds to the minimum point on their average total cost curves. D) It means that firms produce with inefficient combinations of resources.