In perfect competition, when firms are maximizing profits and households are maximizing utility,
A. the outcome is inefficient.
B. individual welfare is maximized, but social welfare is not.
C. voluntary exchange can be used to make both firms and households better off.
D. Pareto optimality has been obtained.
Answer: D
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In the above figure, if output were restricted to 300 million pounds of turkey, then
A) the marginal social benefit would exceed the marginal social cost on the last pound of turkey traded by $0.80. B) there would be a deadweight loss of $40 million. C) there would be inefficient underproduction of turkey. D) All of the above answers are correct.
If price goes up 20 percent and quantity demanded declines by 10 percent, total revenue will rise.
Answer the following statement true (T) or false (F)
Perfectly competitive firms always earn economic profits in the short run.
Answer the following statement true (T) or false (F)
Inflation was a problem during the Great Depression
Indicate whether the statement is true or false