« previous next »

Author Question: Perfectly competitive firms have total control over the price they set for their product. Explain ... (Read 47 times)

@Brianna17

  • Hero Member
  • *****
  • Posts: 550
on: Jun 29, 2018
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
Reply #1 on: Jun 29, 2018
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
« previous next »
 

Did you know?

Congestive heart failure is a serious disorder that carries a reduced life expectancy. Heart failure is usually a chronic illness, and it may worsen with infection or other physical stressors.

Did you know?

Patients should never assume they are being given the appropriate drugs. They should make sure they know which drugs are being prescribed, and always double-check that the drugs received match the prescription.

Did you know?

Computer programs are available that crosscheck a new drug's possible trade name with all other trade names currently available. These programs detect dangerous similarities between names and alert the manufacturer of the drug.

Did you know?

It is difficult to obtain enough calcium without consuming milk or other dairy foods.

Did you know?

The average adult has about 21 square feet of skin.

Total fertility rates (TFRs) among major regions of the world. Total fertility rates (TFRs) among major regions of the world.
Competitive inhibition Competitive inhibition
The effective temperature, or black body temperature, of the Sun (5777 K) is the temperature a black The effective temperature, or black body temperature, of the Sun (5777 K) is the temperature a black
Centers for disease control and prevention guidelines Centers for disease control and prevention guidelines
Importance of Considering Gestalt Principles in Product Design (2 of 2) Importance of Considering Gestalt Principles in Product Design (2 of 2)
The profit, p(t), made at a fair depends on the price of the ticket, t. The profit is modelled ... The profit, p(t), made at a fair depends on the price of the ticket, t. The profit is modelled ...
Video: EpiPen Animation (Part 2)

For a complete list of videos, visit our video library