Price Is Taken to Be a "Given" by an Individual

question 146

Multiple Choice

Price is taken to be a "given" by an individual firm selling in a purely competitive market because

• A)the firm's demand curve is downward-sloping.
• B)there are no good substitutes for the firm's product.
• C)each seller supplies a negligible fraction of the total market.
• D)product differentiation is reinforced by extensive advertising.

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Definitions:

Economic Efficiency

A state where resources are allocated in the most effective way possible, maximizing output without wasting any inputs, ensuring that goods and services are produced at the lowest possible cost and distributed to those who value them most.

Deregulation

The process of removing or reducing government controls and restrictions in an industry to allow for more competition and efficiency.

Pork-Barrel Politics

The allocation of government spending for localized projects secured primarily to bring money to a representative's district, often without proper consideration of the benefits or costs.

Principal-Agent Problem

The principal-agent problem occurs when there is a conflict of interest between a principal (owner or shareholder) and an agent (manager or executive) due to differing goals, with the agent potentially making decisions that benefit themselves at the expense of the principal.