Under perfect competition, firms produce the ________ level of output because price equals marginal cost.
A. equitable
B. most costly
C. efficient
D. greatest
Answer: C
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Consider a society consisting of just a farmer and a tailor. The farmer has 10 units of food but no clothing. The tailor has 40 units of clothing but no food. Suppose each has the utility function U = F1/2C1/2
If the price of clothing is always $1, and the food price is currently $3, then we can conclude A) the market is at a competitive equilibrium. B) the price of food will drop towards a competitive equilibrium. C) the price of food will increase towards a competitive equilibrium. D) None of the above.
Which incentive scheme would simultaneously elicit accurate information about feasible plant production levels and motivate managers to perform up to potential (in the following schemes, B is the bonus payment, Q is actual plant output, and Qf is the
manager's estimate of feasible output)? A) B = 0.4Q B) B = 0.4(Q - Qf) C) B = 0.4Qf + 0.3(Q - Qf) if Q > Qf D) B = 0.4Qf - 0.6(Q - Qf) if Q < Qf E) B = 0.4Qf - 0.6(Q - Qf) if Q > Qf
If you were looking at the economy of Egypt, the best example of its economic infrastructure would be its
a. natural resources b. banking system c. government d. religious and cultural beliefs e. population growth rate
Which of the following is always TRUE in the short run for a perfectly competitive firm that is maximizing economic profits?
A) P = d = MR = MC = AVC B) P = d = MR = MC C) P = d = MR = Q D) MR = MC = Q