Firms in long-run equilibrium in a perfectly competitive industry will produce at the low points of their average total cost curves because
a. free entry implies that long-run profits will be zero no matter how much each firm produces.
b. firms seek maximum profits and to do so they must choose to produce where average costs are minimized.
c. firms maximize profits and free entry implies that maximum profits will be zero.
d. firms in the industry desire to operate efficiently.
c
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In the case of a beneficial externality
a. marginal private cost is below marginal social cost. b. marginal social cost is above marginal private cost. c. marginal social cost and marginal private cost are equal. d. the free market price is below the socially efficient price.
The two main characteristics of a public good are
A. nonrivalry and large negative externalities. B. nonrivalry and nonexcludability. C. nonexcludability and production at rising marginal cost. D. production at constant marginal cost and rising demand.