Since a firm in perfect competition is a price taker, the demand curve for the firm's product is a horizontal line.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 2Marginal utility is defined as:
a. the extra satisfaction the consumer receives from an extra 1 of income.
b. the total level of satisfaction a consumer receives upon the consumption of a certain number of goods.
c. the number of hours a consumer would be willing to work to receive a certain product.
d. the extra satisfaction a person derives from consuming an additional unit of a good.
e. a comparison of the utility a good provides with the price of that good.
QUESTION 3A perfectly competitive industry always has a perfectly elastic (flat) long-run supply curve.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 4If the marginal utility of each good consumers buy does not diminish but remains constant, we should witness consumers:
a. buying no goods at all.
b. spending all of their income on the good with the highest MU.
c. buying one of each good.
d. buying only the least expensive goods.
e. become indifferent to what goods they buy.
QUESTION 5The supply curve for a perfectly competitive firm is its marginal cost curve for all levels of output.
a. True
b. False
Indicate whether the statement is true or false
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