If a Market Comes Close to Meeting (But Does Not

question 158

Multiple Choice

If a market comes close to meeting (but does not perfectly meet) all the assumptions of the theory of perfect competition, it follows that

• A)the market is not perfectly competitive.
• B)the theory of perfect competition still may be able to predict behavior in the market.
• C)firms in the market cannot be price takers.
• D)firms in the market do not try to maximize profit.
• E)a and c

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Definitions:

Present Value

The current worth of a future sum of money or stream of cash flows given a specified rate of return.

Market Rate

The going rate or typical price of goods, services, or interest rates in the open market.

Theory of Profit

An economic theory that analyzes the dynamics of profit in the market economy, focusing on how profit is generated and distributed.

Entrepreneur

An individual who creates, organizes, and operates a business or businesses, taking on greater than normal financial risks in order to do so.