Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
- What might occur when competition drives down the price of a good to a marginal cost?
Perfect competition enables firms of internal economies of scale to upscale their operations creating imperfect competition.- Perfect competition forces firms of internal economies of scale out of the market until an equilibrium featuring imperfect competition is attained.
- Imperfect competition enables firms of internal economies of scale to upscale their operations creating perfect competition.
- Imperfect competition forces firms of internal economies of scale out of the market until an equilibrium featuring perfect competition is attained.
- There is less competition overall as a result of an equilibrium of perfect and imperfect competition.
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