978-1259723223 Test Bank TBChap011 Part 2

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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

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

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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,

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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

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

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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

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

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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