Does the market system result in allocative efficiency? In the long run, perfect competition
A. results in allocative efficiency because firms produce where price equals marginal cost.
B. does not result in allocative efficiency because firms enter and exit until they break even where price equals minimum average cost.
C. results in allocative efficiency because firms produce where the marginal benefit consumers receive from consuming the last unit of the good sold is greater than marginal cost.
D. does not result in allocative efficiency because price does not equal the marginal benefit consumers receive from consuming the last unit of the good sold.
E. does not result in allocative efficiency because firms produce an identical product that offers consumers no variety.
Does the market system result in allocative efficiency? In the long run, perfect competition
A. results in allocative efficiency because firms produce where price equals marginal cost.
B. does not result in allocative efficiency because firms enter and exit until they break even where price equals minimum average cost.
C. results in allocative efficiency because firms produce where the marginal benefit consumers receive from consuming the last unit of the good sold is greater than marginal cost.
D. does not result in allocative efficiency because price does not equal the marginal benefit consumers receive from consuming the last unit of the good sold.
E. does not result in allocative efficiency because firms produce an identical product that offers consumers no variety.
Related textbook solutions
Related questions
21)
Compared to the results in a perfectly competitive market, a monopoly does which of the following?
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It charges a higher price. |
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It charges a price greater than the marginal cost. |
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It produces less output. |
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All of the above |
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None of the above |
22)
"X-inefficiency" refers to the idea that
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government restrictions on competition create a monopoly, which results in inefficiency. |
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the cost of rent-seeking activity should be added to the welfare cost of monopoly. |
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Generation X is less efficient due to a lack of competitive spirit. |
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a lack of competitive pressure results in a monopoly not keeping its costs down to the lowest possible level. |
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price discrimination results in inefficiently low cross-elasticities of demand. |
23)
Firms in which of the following market structures can engage in price discrimination?
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monopoly |
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oligopoly |
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monopolistic competition |
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All of the above |
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None of the above |
24)
Monopolistic competition and perfect competition are in all of the following ways except
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Barriers to entry are low in both |
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There are many firms in both |
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Firms in both produce the output level where MR=MC |
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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?
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Free entry and exit. |
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economic rent |
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resource allocative efficiency |
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differentiated product |
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productive efficiency |
