Which of the Following Assumptions Applies to Both Perfect Competition

question 165

Multiple Choice

Which of the following assumptions applies to both perfect competition and monopolistic competition?

• A)many buyers and sellers
• B)easy entry into and exit from the market
• C)profit is maximized at the level of output for which MR = MC
• D)a and c
• E)all of the above

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Definitions:

Utility Function

A mathematical representation of how consumers rank different bundles of goods or services according to their level of satisfaction or utility.

Budget Constraint

The limitation on the consumption bundles that a consumer can afford given their income and the prices of goods.

Optimum Market Basket

The combination of goods and services that maximizes a consumer’s utility for a given income and prices, representing the most preferred point on their budget line.

Indifference Curves

Graphical representations in microeconomics showing combinations of two goods that give a consumer equal satisfaction and utility.