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Question
Both competitive and monopolistically competitive firms
a. can maximize profit by raising price.
b. cannot control or set their own price.
c. can maximize profit by producing to the point where marginal cost equals marginal revenue.
d. can enforce price arrangements vigorously in court.
e. sell products that are identical.
Answer
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The economic entity most likely to engage in price gouging is
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What is the long-run consequence of a price ceiling law?
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b. A surplus will continue to exist and will grow smaller over time.
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Q:
Suppose Solomon lives in a community with no price controls. What do you expect will happen if his town borders a community where there is a binding price ceiling on most products?
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