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Author Question: How do perfectly competitive markets allow for the movement of resources from less productive ... (Read 61 times)

sheilaspns

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on: Jun 29, 2018
How do perfectly competitive markets allow for the movement of resources from less productive industries to more productive industries?
 
  What will be an ideal response?

Question 2

Perfect price discrimination is also referred to as:
 
  A) first-degree price discrimination.
  B) second-degree price discrimination.
  C) third-degree price discrimination.
  D) fourth-degree price discrimination.


cam1229

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Reply #1 on: Jun 29, 2018
Answer to Question 1

Perfectly competitive markets are characterized by free entry and exit of firms. Whenever firms in a particular industry are seen to earn positive economic profits, other firms are attracted to the industry. Thus, the firms that are entering the profit-making industry bring resources from other industries where they were not fully utilized. Similarly, when an industry is incurring losses, some firms move out of the industry. This allows for the movement of resources from the less productive, loss-incurring industry to other industries.

Answer to Question 2

A


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