The theory of perfect competition is built on several assumptions, including that
A) the individual firm can affect the price of the product it sells.
B) any firm can easily enter or leave the industry.
C) the individual firm can influence demand by advertising.
D) there are few producers of an identical product.
E) each firm must earn economic profits to remain in the industry.
Ans: B) any firm can easily enter or leave the industry.
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Giving up consumption today for consumption tomorrow accelerates economic growth by
A) having the economy produce no consumer goods. B) increasing saving out of disposable income. C) increasing the expected rate of inflation. D) rapid expansion of the money supply.
Which of the following characteristics would describe a product with an inelastic demand?
A. The good is considered a necessity and many substitutes for the product exist. B. The good is considered a necessity and few substitutes for the product exist. C. The good is considered a luxury and many substitutes for the product exist. D. The good is considered a luxury and few substitutes for the product exist.