Are the following statements true or false? Select the best answer. Statement 1: Allocative efficiency holds when the price of the product reflects society's opportunity cost of the resources used to produce that product. Statement 2: Perfectly competitive firms achieve allocative efficiency in the short run and in the long run. Answer

Are the following statements true or false? Select the best answer. Statement 1: Allocative efficiency holds when the price of the product reflects society's opportunity cost of the resources used to produce that product. Statement 2: Perfectly competitive firms achieve allocative efficiency in the short run and in the long run. Answer

Economics:

10th Edition

ISBN:9781285859460

Author:BOYES, William

Publisher:BOYES, William

Chapter24: Perfect Competition

Section: Chapter Questions

Problem 7E

See similar textbooks

Similar questions

Allocative efficiency is an economic concept regarding efficiency at the social or societal level. It refers to producing the optimal quantity of some output, the quantity where the marginal benefit to society of one more unit just equals the marginal cost. The rule of profit maximization in a world of perfect competition was for each firm to produce the quantity of output where P = MC, where the price (P) is a measure of how much buyers value the good and the marginal cost (MC) is a measure of what marginal units cost society to produce. A monopolist... Group of answer choices Would try to achieve allocative efficiency to compete with the other firms who own a larger market share. Will prefer to operate where price < average total cost. Has no motivation to operate at an output level where P=MC, once a barrier is in place and no longer has to worry about competition. Will experience greater profits if it sets prices equal to average total cost.
How would you explain allocative efficiency in a purely competitive market structure? Group of answer choices Firms produce the quantity where the price consumers pay is less than the cost to society to produce it. Firms produce that quantity where the price consumers pay equals the cost to society to produce it. Allocative efficiency is a concept involving only two goods, so it cannot be applied to a perfectly competitive market.. Firms ensure that they produce enough quantity so that everyone who wishes to buy the product can do so.
Provide an explanation of Say's Law as well as an explanation for why this economic perspective is long-run. For this law to hold what economic assumptions must be present (i.e. in your discussion include an analysis of the market assumptions and individual behavior assumptions that are embedded in Say's Law)?
Discuss how the presence of middlemen affects the operation of competitive markets.
Economics Answer "False" or "True" each of the following. Justify by relying on graphical analysis whenever possible. 3.- If the marginal income is greater than the marginal cost, the competitive company will increase its profits by increasing its production (we assume increasing marginal costs). 4.- An industry in which the production process can be done with increasing economies of scale (for any level of production) cannot be one of perfect competition. answer both asap thnx
Michael owns a strawberry farm in central California and is deciding how many strawberries to supply this month. Which question appropriately applies the cost-benefit principle to the supply decision? Is the price Michael gets for the extra bushel of strawberries at least as large as the marginal cost? What is the fixed cost of production for Michael's strawberries? If Michael was not producing strawberries, how else could he use his resources? Is Michael "holding all else constant" when making this decision?
Be able to apply these concepts to all of the market structures: 1. Economically Efficient 2. Productively Efficient 3. Allocatively Efficient
Assuming perfect competition in the market for Good A, let's assume that the equilibrium market price has been established. Assuming all other conditions remain constant (under the ceteris paribus assumption), let's suppose that the price of Good B, which is a substitute for Good A, increases. In this case, how does the equilibrium market price and quantity of Good A change? Show with the help of a graph.
Explain how a firm in a competitive market identifies the profit-maximizing level of production. When should the firm raise production, and when should the firm lower production?
Please explain the following TRUE or FALSE questions. Answers need to be supported with an economic model. Answer both otherwise Dounvaote Firms will maximise profits by producing at the point where MR>MC. When AR > ATC, purely competitive firms will be making economic profit, and this can be maintained into the long run.
Solve the following microeconomics exercises (please include graphs and detailed explanations with all the mathematical operations that were used ) This is all the info that was proportioned. 1.-Perfect competition: The total revenue for a firm in a perfectly competitive market is the product of price and quantity (TR = P * Q). Total cost = Q^2+2Q+6 Demand eq:200-4P supply eq:4P Determine: a) Market equilibrium (graph) b) consumer surplus c) producer surplus 2-duopoly Total cost: Q^2+2Q+4 Demand eq:100-6P Determine: a) Cournot's equilibrium b) collusion case c) in what case Eq1 breaks the balance d) stackelberg equilibrium 3-monopoly Total cost :2Q^2+10Q+80 Q=656-4P Determine: a) optimal production b) equilibrium price c) monopoly profit d) irrecoverable loss
What factors contribute to achieving allocative efficiency in a competitive market, and how does it benefit both consumers and producers?