In perfect competition
a. the demand curve facing the firm is a horizontal line at the market price
b. marginal revenue equals total revenue
c. total revenue always exceeds variable cost
d. price always exceeds average total cost
e. marginal cost always equals average cost
A
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Which of the following best represents collectivization costs?
A) Dinesh has to spend time and effort to make sure that the chemical factory is living up to the agreed upon bargain that it will reduce the pollution it is releasing into the local river by 50 percent. B) Laila needs to come up with enough cash to pay the owners of the paper manufacturing plant, its attorneys, accountants, and negotiators so that a bargain can be reached with the paper manufacturer to reduce air pollution. C) Esperanza has to spend time and effort locating and organizing all the other people who have been adversely affected by the strong odors emanating from the local slaughterhouse in order to initiate the bargaining process. D) Rafael has to spend time determining whether the fertilizer manufacturer, the lead smelter, or the oil refinery is the cause of pollution seeping into the groundwater in his local community.
Which of the following describes how a positive externality affects a competitive market?
A) The externality causes a difference between the private benefit from production and the social cost of production. B) The externality causes a difference between the private benefit from consumption and the social benefit. C) The externality causes a difference between the social cost of production and the social cost of consumption. D) The externality causes quantity demanded to exceed quantity supplied.