What is the difference between economic efficiency and equity?
What will be an ideal response?
Economic efficiency is concerned with maximizing the value of output that can be generated by a given resource base while equity deals with the distribution of society's total output among the sectors and individuals of society.
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In a perfectly competitive industry we are likely to find
a. firms producing a wide variety of products b. barriers to entry c. no profit possible in the short run d. firms that do not advertise e. firms that can choose the price of their products
When all prices are set equal to marginal costs,
A. consumers buy more than they should. B. consumers will get less utility. C. markets are giving correct signals to consumers. D. producers make excessive profits.
The opportunity cost of doing an activity is;
(a) Measured in terms of utils. (b) Measured in terms of the value of the next best alternative that has been given up. (c) Measured in terms of the value of everything else that has been given up. (d) Both (a) and (c) are correct.
Refer to the following graph.
This set of cost curves is:
A. wrong because the average total cost and marginal cost curves are switched. B. correct. C. wrong because the average total cost and average variable cost curves are reversed. D. wrong because the AFC should always be downward-sloping.