2012 Multiple Choice - (Perfect Competition)

2012 Multiple Choice - (Perfect Competition)

I want to believe in Perfect Competition.

Answer - (C) I and IV

Understand that the firm above/below is making profits.

P > ATC = Positive Economic Profits

In the Long-Run Firms enter the industry hunting for profits.

SSSHHHH... I'm hunting for Pwofits.

Answer - (D) Perfectly Competitive Q3

Recognise that the perfectly competitive's firms Total Revenue Curve is upward sloping

and continuous as they can sell all they want at the market price.

Understand that at the quantity where TC is furthest away from TR on the graph is Profit max.

Answer - (E) tastes for luxury goods

WTF!!!!

(A) years of schooling (YES) different wages due to different human capital

(B) Occupations (YES) Obviously the doctor receives more than the bus driver

(C) Marginal Product (S) of workers (YES) workers can be paid different wages based on MP,, at some point someone gets paid a salary of zero, as they aren't hired... 

Yes,, that is a weak explanation..

(D) Marginal Revenue Products (Yes) possibly different firms, different salaries, as the MRP is MP * P (price of the good) so a higher price could lead to larger wages as firms try and hire enough labor to  meet the quantity demanded.

(E) Tastes for Luxury Goods (NO) Someone's desire for luxury goods does not change the wages between workers.