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How do you determine output for each firm in a perfectly competitive market to make it productively efficient. Currently the industry is not efficient  

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Related questions

Consider three firms, A, B and C all producing kilos of potatoes (per year) in a perfectly competitive market. The diagrams below show marginal cost curves for each of the three firms. Firm A Firm B Finn C Cost (S) Quantity Cost (S) Cost (5) MCB o o - N - N 200 200 500 700 Quantity of potatoes 500 800 900 Quantity of potatoes 500 800 Quantity of potatoes FIGURE 12-1 30) Refer to Figure 12-1. Suppose each of Firms A, B, and Care producing 500 kilos of potatoes. Is this industry productively efficient? A) No, because the marginal cost curve for each firm has a different slope. B) Yes, because output is equated for all firms. C) No, because each firm could easily produce more than 500 kilos. D) No, because marginal costs are not equated for all firms. E) It is not possible to say whether this industry is productively efficient because we do not know the market price of the product.

Are perfectly competitive markets productively efficient in the long run?

A. Yes, because firms produce at the lowest average cost possible.

B. Yes, because firms produce where the marginal benefit to consumers equals the marginal cost of production.

C. No, because firms earn zero economic profits.

D. No, because firms will not shut down unless the price is less than the average variable cost of production.

E. Both a and b.

Are perfectly competitive markets productively efficient in the long run?

a. Yes, because firms produce at the lowest average cost possible.

b. Yes, because firms produce where the marginal benefit to consumers equals the marginal cost of production.

c. No, because firms earn zero economic profits.

d. No, because firms will not shut down unless price is less than the average variable cost of production.

e. Both a and b.

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