The Price Received by a Firm in a Perfectly Competitive

question 94

Multiple Choice

The price received by a firm in a perfectly competitive market:

• A)is equal to the market price.
• B)is less than the market price.
• C)is greater than the market price.
• D)decreases with the quantity of output sold by the firm.

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Definitions:

Complementary Goods

Products and services that are used together. When the price of one falls, the demand for the other increases (and conversely).

Income Elasticity

A measure of how much the demand for a good or service changes in response to a change in consumers' income.

Inferior Good

A type of good for which demand decreases as the income of consumers increases, conversely, demand increases when consumer income decreases.

Cross Elasticity

Cross elasticity of demand quantifies how the demand for a good or service is affected by the price change of another related good, reflecting their substitutability or complementarity.