A ________ system is one in which all possible trades that make some societal members better off without making others worse off have been exhausted.
A. general equilibrium
B. Pareto optimal
C. Pareto maximized
D. market
Answer: B
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If the marginal profit from increasing output by one unit is negative, then to attain an optimum, the firm should
A. increase output until marginal profit equals zero. B. reduce output until marginal profit equals zero. C. increase output until marginal profit is maximized. D. reduce output until marginal profit is maximized.
In monopolistic competition, the end result of entry and exit is that firms end up with a price that lies on the downward-sloping portion of the average cost (AC) curve, not at the very bottom of the AC curve. This means that monopolistic competition will:
a. be productively efficient. b. display allocative efficiency, but only in the short run. c. not be productively efficient. d. display allocative efficiency, but only in the long run.
Suppose that the market for labor is initially in equilibrium. A decrease in the price of output will cause the equilibrium wage
a. and the equilibrium quantity of labor to rise. b. and the equilibrium quantity of labor to fall. c. to rise and the equilibrium quantity of labor to fall. d. to fall and the equilibrium quantity of labor to rise.
Firms that do not reach their minimum long run average cost must, to avoid continued losses, either adjust their scale or leave the industry
Indicate whether the statement is true or false