Why are perfectly competitive markets considered efficient?
What will be an ideal response?
Perfectly competitive markets are forced to be efficient by free entry and exit. Competitive firms produce at the minimum point on their average cost curve, produce where price equals marginal cost, and have zero economic profits.
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Holding other things constant, an appreciation of the US Dollar relative to the Chinese Yuan causes the demand for the Yuan to _____________ and the supply for Yuan to __________
a. Increase; decrease b. Increase, increase c. Decrease; Increase d. Decrease; Decrease
Which of the following does not contribute to a firm maintaining a monopoly?
A. Mergers and acquisitions. B. A patent. C. Exclusive control of important resources. D. The presence of many close substitutes for its product.