Perfect competition is efficient because all the following conditions hold except ________
A. total product is maximized
B. firms maximize profit and produce on their supply curves
C. consumers get a real bargain and pay a price below the value of the good
D. firms minimize their average total cost of producing the good
A Although perfectly competitive firms produce at the minimum average total cost, that result does not mean that the firm's total product is at its maximum. Each firm could produce more, albeit at a higher average total cost.
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Bananaland produces only bananas and sunscreen and the quantities and prices for 2012 and 2013 are given in the table above. The base year is 2012. Nominal GDP in 2012 is equal to
A) $500. B) $625. C) $640. D) $800. E) $100.
Within the framework of the AD-AS model, an increase in savings by households will
a. increase the supply of loanable funds and reduce interest rates. b. be offset by a decrease in savings by businesses. c. cause long-run fluctuations in the rate of consumption. d. result in a decline in aggregate demand, output, and employment.