Answer the following questions true (T) or false (F)
1. Allocative efficiency is achieved in an industry when firms supply those goods and services that provide consumers with a marginal benefit equal to the marginal cost of producing those goods and services.
2. A perfectly competitive firm in long-run equilibrium produces output at the lowest possible average total cost.
1. TRUE
2. TRUE
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The assumption that firms attempt to maximize profits will yield good predictions even if firms sometimes pursue other goals.
Answer the following statement true (T) or false (F)
All of the following are assumptions of the production possibilities curve EXCEPT
A) resources are fully employed. B) there is a fixed time period. C) there is a fixed level of technology. D) there is a fixed demand for the products.
In a Nash equilibrium:
A. the strategy played by an individual depends upon the strategy played by other players B. the strategy played by each individual is a best response to the strategies played by everyone else C. there is no incentive for any player to deviate D. All of these are correct.
Classical economists believed that the economy would always return to full employment
a. True b. False