Suppose Life Is Discovered on Mars and That It Turns

question 49

Multiple Choice

Suppose life is discovered on Mars and that it turns out to be quite sophisticated.In fact, perfect competition prevails everywhere on the planet.Which of the following characteristics of Martian firms are we likely to observe?

• A)None of them ever experiences diminishing marginal returns.
• B)They all try to operate where price equals average variable cost.
• C)They all try to operate where price equals total cost.
• D)The are all price takers.

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Definitions:

Multiplier

A factor that quantifies how an increase in spending leads to an increase in national income and output, typically greater than the initial amount spent.

Balanced Budget

When federal tax receipts equal federal government spending.

Constitutional Amendment

A formal change or addition proposed and ratified according to the procedures specified in a constitution, altering the document's framework or principles.

Recessionary Gap

The difference between the actual output of an economy and its potential output if all resources were employed at their maximum efficiency during a recession.