If there is allocative efficiency in a purely competitive market for a product, the maximum price consumers are willing to pay is Multiple Choice equal to the minimum price producers are willing to accept. equal to the amount of efficiency or deadweight losses. less than marginal benefit. greater than marginal cost.
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Allocative efficiency occurs when resources are distributed in such a way that maximizes the total benefit received by all members of society. In a purely competitive market, this means that the price of the product reflects the marginal benefit to consumers. Show more…
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If there is allocative efficiency in a purely competitive market for a product, the maximum price consumers are willing to pay is A) greater than marginal cost. B) equal to the amount of efficiency or dead-weight losses. C) equal to the minimum price producers are willing to accept. D) less than marginal benefit.
Jennifer S.
1. A firm sells a product in a purely competitive market. The marginal cost of the product at the current output of 200 units is $6.00. The minimum possible average variable cost is $8. The market price of the product is $7.00. To maximize profit or minimize losses, the firm should: Group of answer choices produce less than 200 units shutdown produce more than 200 units continue to produce 200 units 2. Alternate Text: A graph showing three U-shaped cost curves: MC, AVC, and ATC. MC is at the minimum of $2, AVC is at the minimum of $5, and ATC is at the minimum of $7. Based on the graph, the longrun equilibrium price is equal to _____________________ Group of answer choices $2 $5 $7 $10 3. What is the lowest allowable profit a firm can have in the long-run pure competition? Group of answer choices Equal to total cost $0 Equal to variable cost Equal to fixed cost 4. Alternate Text: A graph showing three U-shaped cost curves: MC, AVC, and ATC. MC is at the minimum of $1.50 when the output is 3000 units. AVC is at the minimum of $4 when the output is 5500 units. ATC is at the minimum of $5.50 when the output is 6000 units. Group of answer choices 6000 units 5000 units 3000 units 5500 units 5. Which of the following condition guarantees allocative efficiency? Group of answer choices Price = minimum average variable cost Price = marginal cost Price = minimum average total cost Price = marginal revenue
Breanna O.
1. If market is purely competitive and price in the market is greater than firm's marginal cost (P>MC). It means firm is dealing with _____________________ of resources. Group of answer choices over-allocation under-allocation No basis to determine optimal allocation 2. Alternate Text: A graph with two panels. The second panel is a market equilibrium where D intersects S at equilibrium P and Q. First panel has three U-shaped cost curves MC, AVC, and ATC; and horizontal MR same as equilibrium P from the second panel. MR line intersects with MC curve between minimum AVC and minimum ATC. Group of answer choices firms to leave the industry, market supply to fall, and product price to rise firms to leave the industry, market supply to rise, and product price to fall. no change in the number of firms in this industry firms to enter the industry, market supply to rise, and product price to fall. 3. Constant cost industry means _______________________ doesn't change with firm's choices. Group of answer choices total cost cost of production prices of the resources fixed costs 4. In purely competitive markets, productive efficiency is guaranteed _____________________ Group of answer choices when P=MC only in the longrun both in the shortrun and the longrun only in the shortrun 5. The primary force encouraging the entry of new firms into a purely competitive industry is Group of answer choices economic profits earned by firms already in the industry. normal profits earned by firms already in the industry. government subsidies for start-up firms. a desire to provide goods for the betterment of society.
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