unit 8

Question 1

price - taking firms

Answer 1

producers and consumers cann’ot benefit by offering or asking for a price other than the market price in equilibrium of a competitive market. they have no power in influencing the market price.

Question 2

Competitive equilibrium

Answer 2

all buyers and sellers are price-takers QS = QD

Question 3

exogenous shocks

Answer 3

a sharp change in external conditions affecting a model

Question 4

taxation

Answer 4

government can use taxation to raise revenue.

Question 5

model of perfect competition

Answer 5

a model where all buyers and sellers are price takers