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In a perfect competitive market setting, which of the following would be a true statement? a) market price automatically sets itself, exactly, at equilibrium b) market price rarely trends toward the equilibrium value c) wage rates trend toward marginal revenue product levels d) wage rates mirror marginal revenue product levels, exactly
In a perfect competitive market setting, which of the following would be a true statement?
a) market price automatically sets itself, exactly, at equilibrium
b) market price rarely trends toward the equilibrium value
c) wage rates trend toward marginal revenue product levels
d) wage rates mirror marginal revenue product levels, exactly
Expert Solution
The correct option is (a).
In a perfectly competitive market setting, the market price automatically sets itself, exactly, at equilibrium.
In a free market, price and quantity tend towards equilibrium i.e. the point where the demand equals the supply.
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