What is a price taker? Discuss the assumptions used to obtain the perfectly competitive model
What will be an ideal response?
A price taker, or perfectly competitive firm, is a firm that must take the market price of its product as given because it cannot influence the market price. The model of perfect competition has four assumptions. There is a large number of buyers and sellers, and no one has any influence on the market price. The product is homogeneous, so the output of one firm is a perfect substitute for the output of another firm. Buyers and sellers have all the information they require to determine the lowest price and best production technique. Finally, all firms can easily enter or leave the industry.
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Suppose an economy has no income taxes or imports. If the MPC is 0.75, what does the expenditure multiplier equal?
What will be an ideal response?
In the figure above, the lowest 20 percent of all households own ________ percent of all wealth, the next lowest 20 percent own ________ percent of all wealth and the richest 20 percent own ________ percent of all wealth
A) 20; 20; 20 B) 20; 40; 100 C) 5; 15; 40 D) 5; 20; 60