Which of the following statements is true?
A) Production in a perfectly competitive market is efficient because resources in the market leave those sectors in which price cannot cover their costs of production and enter those sectors where price can cover their costs of production.
B) Production in a perfectly competitive market is suboptimal because absence of free entry and exit of firms allows firms to specialize in only one particular industry.
C) Production in a perfectly competitive market is Pareto inefficient because the government or a central planner carefully analyzes the needs and requirements of the society and instructs firms on what to produce and in what quantity.
D) Production in a perfectly competitive market is Pareto efficient because the government or a central planner carefully analyzes the needs and requirements of the society and instructs firms on what to produce and in what quantity.
A
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The AS curve shifts leftward if
A) good weather increases agricultural harvests. B) OPEC reduces world oil prices. C) tax cuts stimulate labor supply. D) the money wage rate increases. E) government expenditure increases.
Pete owns a shoe-shine business. Which of the following costs would be implicit costs? (i) shoe polish (ii) rent on the shoe stand (iii) wages Pete could earn delivering newspapers (iv) interest that Pete's money was earning before he spent his savings to set up the shoe-shine business
a. (i) and (ii) only b. (iv) only c. (iii) and (iv) only d. (i), (ii), (iii), and (iv)
Good governance is:
A. not important to either economic growth or development. B. important to economic growth, but not to economic development. C. important to economic development, but not to economic growth. D. important to both economic growth and development.
The income and substitution effects account for:
A. the upward-sloping supply curve. B. the downward-sloping demand curve. C. movements along a given supply curve. D. shifts in the demand curve.