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Unlike price takers, price searchers do not maximize profits by producing at the point where marginal revenue is equal to marginal cost True False Demand will be more price elastic, when the number of "good" substitutes available to consumers is large
Unlike price takers, price searchers do not maximize profits by producing at the point where marginal revenue is equal to marginal cost True False
Demand will be more price elastic, when the number of "good" substitutes available to consumers is large. True False
Aprofit-maximizing" price searcher will want to charge a price that is equal to marginal cost. O True O False
A market is said to be contestable when barrier to entry and barriers to exit are low. True False
New issues of stocks and bonds are bought and sold by the investing public in the secondary securities markets. True False
Expert Solution
1.
False
Price searchers also produce output to the level where MR = MC. It maximizes their profit.
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2.
True
When number of substitutes are available, then consumer can change the preference if price changes. So, demand becomes more price elastic.
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3.
False
Price will always be higher than the MC, for a price searcher.
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4.
True
In this type of market, firms can enter and exit, with a lower sunk cost involved. So, barriers are lower in this type of market.
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5.
False
New issues of bonds and stock, take place in primary market. for investments Once it is issued by the firms, then it is traded in secondary market.
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