When the Factor Market Is Purely Competitive, the Firm's Average

question 113

Multiple Choice

When the factor market is purely competitive, the firm's average expenditure curve for a factor of production is:

• A) upward sloping and to the right of the marginal expenditure curve.
• B) downward sloping and to the right of the marginal expenditure curve.
• C) identical to the marginal expenditure curve.
• D) downward sloping and to the left of the marginal expenditure curve.

---

Definitions:

Equilibrium Wage

The earnings rate at which the workforce offered balances the workforce demanded.

Binding

In economic terms, refers to a price floor or ceiling that is enforced and has an effect on the market, preventing it from reaching equilibrium.

Price Ceiling

A legally established maximum price for a good or service, aimed at preventing prices from rising too high.

Crude Oil

A natural petroleum product that's extracted from the earth, unrefined, and used as a primary feedstock for fuel and various chemical productions.