In Perfect Competition in long run equilibrium:
a) The firm is productively efficient.
b) The firm is allocatively inefficient.
c) The firm is both productively efficient and allocatively efficient.
d) The firm is productively inefficient.
Answer: c) The firm is both productively efficient and allocatively efficient.
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Suppose the government of Marina aims to minimize the deadweight loss of subsidy. It should: a. provide a subsidy in a market with more inelastic demand. b. provide a subsidy in a market with unit elastic supply
c. provide a subsidy in a market with more elastic demand. d. provide a subsidy in a market with perfectly elastic supply.
Japan and China can both produce guns and rice. The country with the lowest opportunity cost of guns (in terms of rice) will
A. import guns. B. have a comparative advantage in guns. C. have an absolute advantage in guns. D. have a comparative advantage in rice.
The ratio of the prices of two goods measures
A. the rate at which a consumer is willing to substitute one good for another in the market. B. the marginal rate of substitution of X for Y. C. the rate at which a consumer is able to substitute one good for another in the market. D. both a and c E. both b and c
Other things equal, a broad shift to expecting depreciation of the euro will lead to
A. an increase in official exchange market intervention by the euro area monetary authorities. B. an inflow of capital to Europe. C. a lowering of exports of European goods and services. D. a decrease in the demand for euro-denominated financial assets.