Answer to Question #52926 in Microeconomics for Yana

Question

MULTIPLE CHOICE
1. Which of the following is a characteristic of a competitive price-taker market?
a. Profit maximizing firms in the market will expand output until price equals average variable cost.
b. The market demand curve for the product is a horizontal line.
c. There are many firms in the market, each producing a small share of total market output.
d. The product produced by each of the firms is differentiated.

2. Which of the following best illustrates perfect competition?
a. Wheat farming.
b. Orange growers setting quotas under the Sunkist cooperative.
c. General Motors advertising campaign for its cars.
d. All of these.

Answer 1

1. Which of the following is a characteristic of a competitive price-taker market?
b. The market demand curve for the product is a horizontal line.
2. Which of the following best illustrates perfect competition?
a. Wheat farming.