Which of the following is TRUE?
A) Economic efficiency occurs if the maximum feasible amount of output is achieved from a given quantity of inputs.
B) Economic efficiency depends only on what is feasible.
C) If production is technologically efficient then it must be economically efficient.
D) None of the above statements are correct.
D
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In a market where firms are successful in convincing their customers that their product is different from their competitors' product but otherwise have no barriers to entry would be best characterized by
A) monopolistic competition. B) a monopoly. C) perfect competition. D) an oligopoly market.
Excess capacity is a characteristic of monopolistically competitive firms. What does excess capacity mean?
A) It means that firms hire more than the minimum number of workers needed to produce the profit-maximizing level of output. B) It means that firms build plants that are not large enough to achieve minimum efficient scale. C) It means that firms do not produce the output level that corresponds to the minimum point on their average total cost curves. D) It means that firms produce with inefficient combinations of resources.
When competing firms have a commitment strategy, it is called:
A. collusion. B. competitive cooperation. C. predatory pricing. D. competition.
Which is always TRUE at a firm's profit-maximizing rate of production?
A. Marginal Revenue = Marginal Cost B. Marginal Revenue > Marginal Cost C. The total revenue curve lies below the total cost curve. D. Total Revenue = Total Costs