Refer to Figure 7-2. At the market equilibrium
A) the marginal cost is less than the marginal benefit.
B) the marginal cost is greater than the marginal benefit.
C) the marginal cost is equal to the marginal benefit.
D) the marginal cost is zero.
A
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Resource use is efficient when
A) marginal social benefit exceeds marginal social cost. B) marginal social cost is decreasing. C) marginal social benefit equals marginal social cost. D) marginal social benefit is increasing.
Suppose that firms in the perfectly competitive potato-growing industry are earning economic profits. According to economic theory, what is likely to happen?
a. The costs of the firms will increase, eventually eliminating the profit. b. The existence of profits will lead to a drop in the demand for potatoes. c. More firms will enter the market, thereby increasing the industry supply and lowering the market price. d. More firms will enter the market, thereby decreasing the industry supply and raising the market price.