Macroeconomists Are Able to Study the Entire Economy by

question 47

Multiple Choice

Macroeconomists are able to study the entire economy by

• A) ignoring much of the data available in order to reduce the number of markets that need to be studied
• B) studying only a few markets at a time
• C) simply adding up all the prices and quantities in individual markets
• D) aggregation which reduces the number of markets that need to be studied
• E) dividing total output by the number of markets

---

Definitions:

Pure Competition

A market structure characterized by a large number of small firms, identical products, and free entry and exit from the market.

Long-run Adjustments

Changes a firm or industry makes over a long period to adapt to changes in demand, technology, or other economic factors.

Allocative Efficiency

Occurs when resources are distributed in a way that maximizes the net benefit to society, with goods and services produced at the level where the last unit provides a benefit equal to its cost of production.

Purely Competitive Industry

An industry characterized by many sellers offering identical products where each seller is a price taker due to market forces.