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.

Insight into how market conditions, such as price ceilings and floors, affect consumer and producer surplus.

Grasp the impact of market demand shifts on total surplus at new equilibrium prices.

Understand the process of auction and bid pricing in market transactions.

Understand the concept of producer surplus and how it is determined in a market equilibrium.

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Definitions:

Statement of Income

A financial document that shows a company's revenues, expenses, and profits over a specific period, highlighting the company's operating performance.

Share Capital

The amount of money that shareholders invest in a company in exchange for shares of ownership.

Statement of Cash Flows

a financial statement that shows how changes in balance sheet accounts and income affect cash and cash equivalents, and breaks the analysis down to operating, investing, and financing activities.

Investing Transactions

Financial activities related to the acquisition or sale of long-term assets and other investments.