Author Question: Perfectly competitive firms have total control over the price they set for their product. Explain ... (Read 36 times)

@Brianna17

  • Hero Member
  • *****
  • Posts: 550
Perfectly competitive firms have total control over the price they set for their product. Explain why the previous statement is correct or incorrect.
 
  What will be an ideal response?

Question 2

Kristen has an income of 450 per year to spend on music CDs and movies on DVDs. Initially the price of a CD is 15 and the price of a DVD is 22.50. The indifference curves in the figure above (I1, I2, and I3 ) reflect Kristen's preferences.
 
  If the price of a DVD falls to 18, Kristen will buy A) 10 DVDs and 15 CDs per year.
  B) 15 DVDs and 12 CDs per year.
  C) 12.5 DVDs and 11 CDs per year.
  D) 13 DVDs and 15 CDs per year.



dyrone

  • Sr. Member
  • ****
  • Posts: 322
Answer to Question 1

The statement is incorrect. Perfectly competitive firms are price takers, which means that they have no control over the price of their product. They must take the price given to them by the market as a whole, that is, they must take the price determined by the market demand and market supply.

Answer to Question 2

B



Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
 

Did you know?

Most women experience menopause in their 50s. However, in 1994, an Italian woman gave birth to a baby boy when she was 61 years old.

Did you know?

For high blood pressure (hypertension), a new class of drug, called a vasopeptidase blocker (inhibitor), has been developed. It decreases blood pressure by simultaneously dilating the peripheral arteries and increasing the body's loss of salt.

Did you know?

Patients who have been on total parenteral nutrition for more than a few days may need to have foods gradually reintroduced to give the digestive tract time to start working again.

Did you know?

Drug abusers experience the following scenario: The pleasure given by their drug (or drugs) of choice is so strong that it is difficult to eradicate even after years of staying away from the substances involved. Certain triggers may cause a drug abuser to relapse. Research shows that long-term drug abuse results in significant changes in brain function that persist long after an individual stops using drugs. It is most important to realize that the same is true of not just illegal substances but alcohol and tobacco as well.

Did you know?

More than 30% of American adults, and about 12% of children utilize health care approaches that were developed outside of conventional medicine.

For a complete list of videos, visit our video library