A competitive market with flexible prices and many buyers and sellers will:
A) tend to create surpluses.
B) tend to create shortages.
C) reach an equilibrium where the market clears.
D) reach and equilibrium only if a government agency sets the price.
Ans: C) reach an equilibrium where the market clears.
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Dumping raw sewage into Boston Harbor is an example of
a. a negative externality b. a positive externality c. a private cost d. a sunk cost e. an inverse cost
Which of the following is true of marginal revenue product (MRP) and marginal product (MP)?
a. MRP = MP ? price, whether the firm is a price searcher or not. b. MRP = MP ? price only if the firm is a price searcher. c. MRP = MP ? price only if the firm sells in a perfectly competitive market. d. MRP = MP ? marginal cost only if the firm is a price searcher. e. MRP = MP/price only if the firm is a price taker.