A perfectly competitive firm will be profitable if price at the profit-maximizing quantity is above:
A. ATC.
B. MC.
C. AFC.
D. AVC.
Answer: A
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The figure above shows the market for a good with an external benefit. The efficient level of production is ________ units because ________
A) 8; marginal benefit equals marginal cost B) 8; marginal cost is less than marginal social benefit C) 10; marginal cost equals marginal social benefit D) 10; marginal social benefit exceeds marginal benefit E) 8; marginal benefit equals the marginal external benefit
The point where the indifference curve is tangent to the budget line
A) is the best affordable point. B) is where the marginal rate of substitution exceeds the relative price by as much as possible. C) is a point on consumer's demand curve. D) All of the above answers are correct.
The long-run result of government intervention in responding to a recession is:
A. the same level of output at higher prices. B. higher level of output at higher prices. C. higher level of output at lower prices. D. lower level of output at the same prices.
Which of the following outcomes is consistent with a purely competitive market in long-run equilibrium?
A. Consumer and producer surplus will be maximized. B. P = MC = lowest AVC. C. The minimum willingness to pay equals the maximum acceptable price. D. We would expect all of these to occur in the long run in a purely competitive market.