Why should a perfect competitor produce at which price equals marginal cost?
What will be an ideal response?
For a perfect competitor, its market price equals marginal revenue. Because profits are maximized when marginal revenue equals marginal cost, a perfect competitor will therefore maximize profits by producing at marginal revenue equals marginal cost. A lower or higher level of output than that profit-maximizing output level will only result in lower profits.
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Purchasing power parity does not hold in the short to medium run because
A) exports don't equal imports. B) exchange rates fluctuate too much. C) most business cycles are caused by shocks to aggregate demand. D) countries produce different goods.
In 2012, Ben Bernanke expressed which concern about persistently high unemployment?
A) It would result in high inflation. B) It would result in structural damage to the economy that would last for years. C) It would never decline to desired levels. D) It would cost him his job.