ECON 110 Chapter Notes - Chapter 12: Economic Surplus, Perfect Competition, Longrun

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Three examples of inefficiency in the use of fully employed resources. If firms do not use the least-cost method of producing their chose outputs, they are being inefficient. If the marginal cost of production is not the same for every firm in an industry, the industry is being inefficient. If too much of one product ant too little of another product are produced, the economy"s resources are being used inefficiently. Productive efficiency for the firm when the firm chooses among all available production methods to produce a given level of output at the lowest possible cost. Productive efficiency for the firm requires the firm to be producing its output at the lowest possible cost. Productive efficiency for the industry requires that the marginal cost of production be the same for each firm. Productive efficiency and the production possibilities boundary: if firms and industries are productively efficient, the economy will be on, rather than inside, the production possibilities boundary.

Related Questions

35) Consider two firms, A and B, that are producing the same product but with different marginal costs. In this case, A) a reallocation of output between the firms can lower the industry's total cost. B) neither firm is producing its output at the lowest attainable cost. C) some resources must be unemployed. D) each firm is being wasteful. E) the industry as a whole is operating at the lowest possible cost of production.

21)

Compared to the results in a perfectly competitive market, a monopoly does which of the following?

	It charges a higher price.
	It charges a price greater than the marginal cost.
	It produces less output.
	All of the above
	None of the above

22)

"X-inefficiency" refers to the idea that

	government restrictions on competition create a monopoly, which results in inefficiency.
	the cost of rent-seeking activity should be added to the welfare cost of monopoly.
	Generation X is less efficient due to a lack of competitive spirit.
	a lack of competitive pressure results in a monopoly not keeping its costs down to the lowest possible level.
	price discrimination results in inefficiently low cross-elasticities of demand.

23)

Firms in which of the following market structures can engage in price discrimination?

	monopoly
	oligopoly
	monopolistic competition
	All of the above
	None of the above

24)

Monopolistic competition and perfect competition are in all of the following ways except

	Barriers to entry are low in both
	There are many firms in both
	Firms in both produce the output level where MR=MC
	Nonprice competition is important in both

25)

To get rid of excess capacity from the monopolistic competition in the long run, what would have to be given up?

	Free entry and exit.
	economic rent
	resource allocative efficiency
	differentiated product
	productive efficiency

taupeant454

If two firms are producing the same product at different marginal costs, then:

	a reallocation of output between firms can lower the industry's total cost
	one firm must be producing where P does not equal MC
	one firm is not maximizing profits
	neither firm is producing its output at the lowest attainable cost
	some resources must be unemployed

orangewoodchuck691

ECON 110 Chapter Notes - Chapter 12: Economic Surplus, Perfect Competition, Longrun

ECON 110 Full Course Notes

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