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11-21
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
C. in both the short run and the long run.
D. only to a purely competitive firm.
45. If the long-run supply curve of a purely competitive industry slopes upward, this implies that
the prices of relevant resources
46.
Line (1) in the diagram reflects the long-run supply curve for
47.
Line (2) in the accompanying diagram reflects the long-run supply curve for
48.
Line (1) in the diagram reflects a situation where resource prices
49.
Line (2) in the diagram reflects a situation where resource prices
50. Allocative efficiency is achieved when the production of a good occurs where
11-26
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
Ac c e s s i b ili t y :
Keyboard Navigation
Blooms: Understand
Diff icult y:
02 Medium
Learning Objective: 11-04 Show how long-run equilibrium in pure competition produces an
efficient allocation of resources.
Test Bank: I
Topic:
Pure Competition and Efficiency
51. A firm is producing an output such that the benefit from one more unit is more than the cost of
producing that additional unit. This means the firm is
52. Resources are efficiently allocated when production occurs where
53. The term productive efficiency refers to
11-27
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
A. any short-run equilibrium position of a competitive firm.
B. the production of the product mix most desired by consumers.
C. the production of a good at the lowest average total cost.
D. fulfilling the condition P = MC.
54. If the price of product Y is $25 and its marginal cost is $18,
55. If the price of bottled water is $2 and the marginal cost of producing it is $2.50,
11-28
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
Topic:
Pure Competition and Efficiency
56. The term allocative efficiency refers to
57. Under pure competition, in the long run
58. If for a firm P = minimum ATC = MC, then
11-29
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
Diff icult y:
02 Medium
Learning Objective: 11-04 Show how long-run equilibrium in pure competition produces an
efficient allocation of resources.
Test Bank: I
Topic:
Pure Competition and Efficiency
59.
The diagram portrays
60.
If the competitive firm depicted in this diagram produces output Q, it will
61.
Refer to the diagram. By producing at output level Q,
62.
In the diagram, at output level Q1,
63.
At output level Q1, in this diagram,
64.
Refer to the diagram. At output level Q2,
65. Assume that society places a higher value on the last unit of X produced than the value of the
resources used to produce that unit. With no spillovers, this information means that
11-35
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
C. marginal cost is greater than price.
D. resources are being overallocated to X.
66. If production is occurring where marginal cost exceeds price, the purely competitive firm
will
67. If a purely competitive firm is producing where price exceeds marginal cost, then
68. Which of the following conditions is true for a purely competitive firm in long-run
equilibrium?
69. Allocative efficiency occurs whenever
70. In long-run equilibrium, purely competitive markets
11-37
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
Ac c e s s i b ili t y :
Keyboard Navigation
Blooms: Understand
Diff icult y:
02 Medium
Learning Objective: 11-04 Show how long-run equilibrium in pure competition produces an
efficient allocation of resources.
Test Bank: I
Topic:
Pure Competition and Efficiency
71. Which of the following would not be expected to occur in a purely competitive market in
long-run equilibrium?
72. Which of the following outcomes is consistent with a purely competitive market in long-run
equilibrium?
73. Entrepreneurs in purely competitive industries
74. Innovations that lower production costs or create new products
75. The process by which new firms and new products replace existing dominant firms and
products is called
76. Creative destruction is
77. The theory of creative destruction was advanced many years ago by
78. Creative destruction is least beneficial to
11-40
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
Test Bank: I
Topic:
Technological Advance and Competition
79. Which of the following is an example of creative destruction?
80. With the creation and growth of the Internet, vacationers can now book their own flights,
hotels, rental cars, and other travel logistics online. If this capability resulted in creative
destruction, which of the following industries would we have expected to
decline the most as a result?
81. (Consider This) The average life expectancy of a U.S. business is approximately
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