In the long run, a perfectly competitive market produces at ________, whereas the monopolistic competitive firm does not.
A. the point at which MR = MC=ATC
B. the output at which the lowest average total cost of production is reached
C. zero economic profits
D. an output level at which positive economic profits exist
Answer: B
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Productive efficiency occurs at the point where
A. consumer surplus exceeds producer surplus by the greatest amount. B. the production technique minimizes cost. C. the production technique minimizes economic surplus. D. marginal benefit exceeds marginal cost by the greatest amount.
If a firm experiences diminishing returns its marginal product must be negative
Indicate whether the statement is true or false
A pollution tax
a. is itself a form of negative externality b. is a positive externality used to offset a negative one c. is a price per unit of discharge of pollution d. is a tax on pollution control equipment e. may cause a common pool problem
The principle of comparative advantage states that a country should specialize in the production of those goods that have the highest opportunity costs
a. True b. False Indicate whether the statement is true or false