The perfectly competitive model assumes that:

The perfectly competitive model assumes that:
 a. individual sellers can influence the market price.
 b. sellers can increase their total revenue by raising prices.
 c. firms can enter and exit the industry with relative ease.
 d. firms compete by varying a product's quality rather than a product's price.

QUESTION 2

Unlike nonrenewable resources, the timing of extraction of renewable resources are independent of the market rate of interest.
 a. True
  b. False
  Indicate whether the statement is true or false

QUESTION 3

Brett, who is a chef, divides his time between fishing and cooking meals. His production set is described by the equation , where is the number of salmon he catches and y the number of meals he cooks. If Brett catches 5 salmon and cooks 2 meals,
 a. he is overusing his resources.
  b. the result is economically efficient.
  c. the result is economically inefficient.
  d. he is achieving the best possible outcome.

QUESTION 4

A positively sloped long run average cost implies:
 a. economies of scale.
  b. constant returns to scale.
  c. diseconomies of scale.
  d. diminishing marginal returns to a factor.
  e. increasing returns to scale.

QUESTION 5

If a firm in a perfectly competitive market sells 100 units of output and total revenues are 500, which of the following statements are true? (i) Marginal revenue equals 5. (ii) Average revenue equals 5. (iii) Price equals 5.
 a. (i) only
 b. (iii) only
 c. (i) and (ii) only
  d. (i), (ii), and (iii)

QUESTION 6

Suppose Zia spends her time picking berries and apples. Her production set is described by the equation , where is the number of berries and y the number of apples. Which of the following statements will be true?
 a. 25 apples and 10 berries is achievable but inefficient.
  b. 10 berries and 2 apples is efficient but unachievable.
  c. 20 apples and 5 berries is an inefficient level of production.
  d. 30 berries and 5 apples is an efficient level of production.

QUESTION 7

If the rate of extraction of a renewable resource is greater than its rate of replenishment, the price of the resource is likely to fall in future.
 a. True
  b. False
  Indicate whether the statement is true or false