A Perfectly Competitive Firm Has Control Over

question 28

Multiple Choice

A perfectly competitive firm has control over:

• A) the number of firms in the market.
• B) market conditions.
• C) the price at which to sell.
• D) the quantity of output to produce.

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Definitions:

Principal-Agent Problem

A dilemma arising from conflicts of interest between a principal (e.g., an employer or shareholder) and an agent (e.g., an employee or manager) when the agent is motivated to act in his own best interests rather than those of the principal.

Banking Industry

A sector of the economy comprising institutions that offer financial services, such as deposit accounts, loans, and currency exchange.

United States

A country in North America consisting of 50 states, a federal district, five major self-governing territories, and various possessions.

Incentive

A factor, either monetary or non-monetary, that motivates individuals or firms to act in a certain way.