Assume a customer of natural gas is negotiating with his supplier over the telephone. At the time prices of all the supplier's competitors are precisely the same
The customer tells the supplier that if he raises his price even one penny he will walk away. What does the perceived demand curve for natural gas look like for this customer? Why?
The elasticity of demand is perfectly elastic. The demand curve is horizontal at the current price. The customer is likely to behave this way since he sees that there are other suppliers willing to offer the same price for essentially what he perceives to be a homogeneous good.
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A perfectly competitive firm is allocatively efficient because price is identical to marginal cost at every quantity
a. True b. False
Refer to the information provided in Figure 2.4 below to answer the question(s) that follow.
Figure 2.4According to Figure 2.4, the optimal point for the economy is
A. A. B. B. C. F. D. indeterminate from the information given.