A perfectly competitive industry achieves allocative efficiency in the long run. What does allocative efficiency mean?
A) Firms use an input combination that minimizes cost and maximizes output.
B) Each firm produces up to the point where all scale economies are exhausted.
C) Each firm produces up to the point where the price of the good equals the marginal cost of producing the last unit.
D) Production occurs at the lowest average total cost.
C
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A discussion on whether an economic practice is ethical would likely be found in an article on
a. businesses that failed b. macroeconomics c. positive economics d. normative economics
If total cost is $1,000 when output is zero, and total cost is $1,200 when output is one, and total cost is $1,500 when output is two, then which of the following is true?
a. Total fixed cost is $1,500. b. The marginal cost of producing the first unit of output is $1,200. c. The marginal cost of producing the second unit of output is $300. d. The average fixed cost is $750 when two units of output are produced.