"A perfectly competitive firm is called a price maker because all the firms together must make the market price." Is the previous statement correct or incorrect? Briefly explain your answer
What will be an ideal response?
The statement is false. A perfectly competitive firm is called a "price taker" because the firm must take whatever price the market determines. Any single firm's actions cannot affect the market price.
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One type of financial intermediary now rising in relative importance is
A) pension funds. B) banks. C) savings-and-loan associations (S&Ls). D) life insurance companies.
Use the following graph, which shows the supply and demand curves for dollars in the pound/dollar market, to answer the next question.
Assume that D1 and S1 are the initial demand for and supply of dollars. Now suppose that Great Britain increases its imports of American products. Assuming freely-floating exchange rates, ________.
A. the dollar price of pounds will increase to $5 = 1 pound B. the pound price of dollars will rise to 1/4 pound = $1 C. the pound price of dollars will fall to 1/5 pound = $1 D. Britain will experience a dollar shortage of N?M