Price in a Perfectly Competitive Industry

question 238

Multiple Choice

Price in a perfectly competitive industry:

• A)is determined by each firm,depending on its costs of production.
• B)is always equal to marginal revenue for the firm.
• C)must be greater than average total cost or the firm will shut down in the short run.
• D)is indeterminate in the short run.

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Definitions:

Paycheque

A check issued to an employee for earned wages, representing the net amount after deductions such as taxes and social security contributions.

Compensating Balances

A minimum bank account balance a borrower is required to maintain as part of a loan agreement, offering the bank some security.

Transactional Motive

The transactional motive is the need to hold cash for the purpose of conducting day-to-day business operations, such as paying wages and suppliers.