Author Question: Countries that abandoned the gold standard early in the Great Depression suffered an average decline ... (Read 59 times)

kodithompson · **on:** Jun 29, 2018

Countries that abandoned the gold standard early in the Great Depression suffered an average decline in production of 3 percent between 1929 and 1934.

Countries that stayed on the gold standard until 1933 or later suffered an average decline in production of
A) 12 percent. B) 18 percent. C) 24 percent. D) > 30 percent.

Question 2

Do you think sellers in a perfectly competitive market can price their goods differently? Explain your answer.

What will be an ideal response?

huda · **Reply #1 on:** Jun 29, 2018

Answer to Question 1

D

Answer to Question 2

One of the assumptions of perfect competition is that all sellers sell identical goods. This implies that sellers who increase the price of their products will lose market share and go out of business because consumers will shift to other sellers who are offering the same goods. Besides, a seller in a perfectly competitive market can sell any amount of the good at the given market price. Hence, they actually do not have any incentive to deviate (increase or decrease) from the market price. Thus, all sellers in a perfectly competitive market are price takers.