The price setting equation is represented by the following: P = (1 + m)W.When there is perfect competition,we know that m will equal

Question

Quizplus · Accepted Answer

In perfect competition, there is no market power, meaning that firms cannot influence the price of the product they are selling. Therefore, they must accept the market price, which is equal to the marginal cost of production. In this case, m will equal 1, as the price setting equation P = (1 + m)W simplifies to P = 2W, and W is equal to the marginal cost. Therefore, the correct answer is C, 1.

The Price Setting Equation Is Represented by the Following: P