Which of the following statements is true of perfect competition?
A) The outcome in a perfectly competitive market is Pareto inefficient.
B) The total value of production across a perfectly competitive industry is maximized.
C) Firms under perfect competition produce at a point where price is greater than marginal cost.
D) Consumers in a competitive market purchase at a point where marginal utility is greater than price.
B
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Suppose that the Consumer Price Index for a particular economy rose from 110 to 120 in year 1, 120 to 130 in year 2, and 130 to 140 in year 3. We could conclude that this economy is experiencing:
A. accelerating inflation. B. deflation. C. disinflation. D. a constant rate of inflation.
For a given level of inflation, if concerns about future weakness in the economy cause businesses to reduce their spending on new capital, then the ________ shifts ________.
A. short-run aggregate supply line; upward B. aggregate demand curve; left C. short-run aggregate supply line; downward D. aggregate demand curve; right