Although price searchers can set their prices, the prices they can set are still affected by market conditions.
a. True
b. False
2. Suppose firms in a competitive price-searcher market with low barriers to entry are earning an economic profit.
Firms will (enter/exit) this market until economic profits are (zero/postive/ negative)
Ans:
a. True
2. enter, zero
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A firm producing compact discs reports the following production information:
# of Workers Total Product (boxes of CDs per hour) 0 0 1 125 2 225 3 305 4 365 5 405 6 425 The compact discs sell in a competitive market at a price of $0.20 per box. The firm hires workers in a competitive labor market at a wage of $12 per hour. The firm is currently hiring four workers and is considering hiring a fifth worker. What would you recommend the firm do? Why?
Refer to Figure 10-9. The change in the budget constraint from BC1 to BC2 implies
A) income and the prices of DVDs and CDs have increased. B) the price of DVDs has increased and the price of CDs has decreased. C) the prices of DVDs and CDs have increased. D) the price of DVDs has decreased and the price of CDs has increased.