A competitive market maximizes social welfare because in a competitive market,
A) profits are zero.
B) price equals marginal cost of the last unit produced.
C) price equals average cost of the last unit produced.
D) there is free entry and exit.
B
You might also like to view...
Tom and Billy are playing a game. They both toss a coin simultaneously. If both are heads or tails, Tom wins. If the results of the tosses are different, Billy wins. This is an example of a(n) ________
A) prisoners' dilemma B) variable-sum game C) zero-sum game D) extensive-form game
If the Fed responds to an increase in government spending with the goal of stable prices and output, which of the following would be the result?
a. A larger multiplier effect than normal b. Partial crowding out c. An increase in consumption and investment spending d. No crowding out e. Complete crowding out
Which of the following statements is correct?
a. The CPI can be used to compare dollar figures from different points in time. b. The percentage change in the CPI is a measure of the inflation rate, but the percentage change in the GDP deflator is not a measure of the inflation rate. c. Compared to the consumer price index (CPI), the GDP deflator is the more common gauge of inflation. d. The GDP deflator better reflects the goods and services bought by consumers than does the CPI.
Which of the following would not occur as a result of a monopolistically competitive firm suffering a short-run economic loss?
A) The firm could exit the industry in the long run. B) If the firm does not exit the industry in the long run its demand curve will shift to the left. C) If the firm does not exit the industry in the long run its demand curve will shift to the right. D) If the firm remains in the industry in the long run it will break even.