If Perfect Competition Prevails in a Two Good (X and Y)and

question 84

Multiple Choice

If perfect competition prevails in a two good (X and Y) and two input (L and K) economy,all of the following conditions are satisfied,except that:

• A)the price of good X is equal to the price of good Y.
• B)the marginal cost of producing good X is equal to the price of good X.
• C)the marginal rate of substitution between X and Y is equal to the marginal rate of transformation.
• D)the ratio of the marginal costs of the inputs is equal to the input price ratio.

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Definitions:

Japanese Concept

Management and production practices originating in Japan that emphasize efficiency, continuous improvement, and worker involvement, such as Kaizen and Lean Manufacturing.

Bullwhip Effect

A phenomenon in supply chains where small fluctuations in demand at the retail level cause increasingly larger fluctuations in demand at the wholesale, distributor, and manufacturer levels.

Quantity Discounts

Price reductions given for purchasing goods in large quantities, often used by sellers to encourage bulk purchases.

Annual Volume

The total amount of something produced or processed in a year.