When there are many producers of an identical product and you ...

[chads108]

When there are many producers of an identical product and you have perfect and free information about what every seller is charging, eventually every merchant will
 
  A) raise the price of the product in hopes that you will purchase the product from them.
  B) agree to charge a high price for the product so each will be able to earn high profits.
  C) charge the same price for the product, and the price will be just enough to cover costs.
  D) discontinue selling the product since there is so much competition.

Question 2

Sabrina is a college professor in Houston, Texas who earns a salary of 95,000. She is single, just put down 25,000 on a new townhouse, and has no children. Explain if Sabrina has any way of reducing her payroll taxes or her personal income tax.
 
  What will be an ideal response?

[kaykay69]

Answer to Question 1

C

Answer to Question 2

Sabrina has no way of reducing payroll taxes (Social Security tax and Medicare tax) unless she takes a cut in salary. She can reduce her personal income tax by claiming her 3,950 personal exemption, she can deduct her mortgage interest from the mortgage she pays on her new townhouse, she can donate to charity and claim those donations as deductions, and she can deduct any contributions she may be able to make to a pension or retirement plan.