If a perfectly competitive firm manufacturing chairs produces 100 more chairs, what happens to the market price of a chair?
What will be an ideal response?
The price will not change. Any one perfectly competitive firm is such a small part of the market that a change in its output has virtually no effect on the price. This result is why the firm's marginal revenue equals its price: No matter how much (or how little) the firm produces, the marginal revenue from one more unit always equals the price of the product.
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________ of unemployment during ________ make it easier for workers to ________ wages
A) Low levels; an expansion; negotiate higher B) High levels; an expansion; accept lower C) High levels; a recession; negotiate higher D) Low levels; a recession; accept lower
For a monopoly, marginal revenue is less than price because
A) the firm is a price taker. B) the firm must lower price if it wishes to sell more output. C) the firm can sell all of its output at any price. D) the demand for the firm's output is perfectly elastic.