Short Answer TypeWhat is a market economy?
In a market economy, all economic activities are organised through the market. It is an economic system in which economic decisions and the pricing of goods and services are guided solely by the aggregate interactions of a country's citizens and businesses and there is little government intervention or central planning.
8 units of a good are demanded at a price of Rs. 7 per unit. Price elasticity of demand is (-)1. How many units will be demanded if the price rises to Rs. 8 per unit? Use expenditure approach of price elasticity of demand to answer this question.
Draw average revenue and marginal revenue curves in a single diagram of a firm which can sell more units of a good only by lowering the price of that good. Explain.
Explain the implication of 'freedom of entry and exit to the firms' under perfect competition.
Explain the implication of 'perfect knowledge about market' under perfect competition.
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