« previous next »

Author Question: Perfectly competitive firms have total control over the price they set for their product. Explain ... (Read 61 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?

Asthma-like symptoms were first recorded about 3,500 years ago in Egypt. The first manuscript specifically written about asthma was in the year 1190, describing a condition characterized by sudden breathlessness. The treatments listed in this manuscript include chicken soup, herbs, and sexual abstinence.

Did you know?

As of mid-2016, 18.2 million people were receiving advanced retroviral therapy (ART) worldwide. This represents between 43–50% of the 34–39.8 million people living with HIV.

Did you know?

Medications that are definitely not safe to take when breastfeeding include radioactive drugs, antimetabolites, some cancer (chemotherapy) agents, bromocriptine, ergotamine, methotrexate, and cyclosporine.

Did you know?

Liver spots have nothing whatsoever to do with the liver. They are a type of freckles commonly seen in older adults who have been out in the sun without sufficient sunscreen.

Did you know?

The modern decimal position system was the invention of the Hindus (around 800 AD), involving the placing of numerals to indicate their value (units, tens, hundreds, and so on).

Genetic control of root hair development. Genetic control of root hair development.
Hormonal Control of Development of the Internal Sex Organs Hormonal Control of Development of the Internal Sex Organs
Neuroendocrine Control of the Menstrual Cycle Neuroendocrine Control of the Menstrual Cycle
Ginkgo Biloba label. The label indicates the product is standardized to percentages of the two ... Ginkgo Biloba label. The label indicates the product is standardized to percentages of the two ...
Control of urination. Control of urination.
Importance of Considering Gestalt Principles in Product Design (1 of 2) Importance of Considering Gestalt Principles in Product Design (1 of 2)
Video: baroreceptors

For a complete list of videos, visit our video library