Question : 11) Allocative efficiency actively sought A) by profit-maximizing firms in all : 1384259

11) Allocative efficiency is actively sought

A) by profit-maximizing firms in all market structures.

B) only by perfectly-competitive firms.

C) only by profit-maximizing imperfectly-competitive firms.

D) by none of the firms in any market.

E) by all firms in all markets.

12) Productive efficiency (at the level of the firm) is a goal that is sought

A) by profit-maximizing firms in all market structures.

B) only by perfectly competitive firms.

C) only by profit-maximizing imperfectly competitive firms.

D) by no firms in any market.

E) only by profit-maximizing firms in an oligopolistic market structure.

13) Allocative efficiency is a property of the behaviour of

A) individual firms.

B) all firms in an industry.

C) perfectly-competitive firms.

D) monopolies.

E) the overall economy.

14) Allocative efficiency concerns

A) producing outputs at lowest possible cost.

B) the allocation of resources such that total economic surplus is maximized.

C) encouraging monopoly if it generates innovation.

D) discouraging all monopoly firms.

E) the equitable distribution of resources.

15) At the level of the industry, the condition for productive efficiency is that

A) goods are allocated equitably.

B) there are no idle resources in the industry.

C) MC = P for all goods.

D) MRP = P for all inputs.

E) MC is equal for all firms in the industry.

16) We can safely say that each point on a country’s production possibilities boundary (PPB) is

A) allocatively efficient.

B) one at which P = MC for all goods.

C) productively efficient.

D) Pareto optimal.

E) not productively efficient.

17) An economy in which there are no market failures and all industries are in a competitive long-run equilibrium is one where

1. allocative efficiency is achieved;

2. the economy is on the production possibilities boundary;

3. there is no incentive for firms to enter or leave industries.

A) 1 and 2

B) 2 and 3

C) 1 and 3

D) 1, 2, and 3

E) 2 only

18) Consider a monopolistically competitive industry in long-run equilibrium. Will this industry be productively efficient?

A) Yes. Since the firms are in long-run equilibrium, they will all be producing at the minimum of their LRAC curves.

B) Yes. Since the firms are in long-run equilibrium, they will all be operating on their LRAC curves.

C) Yes. In long-run equilibrium, each firm is producing at an output level where price is equal to marginal cost.

D) No. Firms are selling their output at a level where price exceeds marginal cost and thus, by definition, cannot be productively efficient.

E) No. Since firms are selling differentiated products and there is no industry-wide price, we cannot conclude that marginal cost will be equated across all firms.

19) Consider an industry with three profit-maximizing firms producing identical soccer jerseys. At their current levels of output, Firm A has a MC of $22, Firm B has a MC of $26, and Firm C has a MC of $27. Each firm is equating price and marginal cost and is operating on their LRAC curve. Which of the following statements is definitely true?

A) Each firm and the industry are productively efficient.

B) Each firm is productively efficient but the industry is not.

C) The industry is productively efficient but each firm is not.

D) Each firm is allocatively efficient but the industry is not.

E) Each firm and the industry are allocatively efficient.

20) Refer to Figure 12-1. Suppose each of Firms A, B, and C are producing 500 kilos of potatoes. Is this industry productively efficient?

A) No, because the marginal cost curve for each firm has a different slope.

B) Yes, because output is equated for all firms.

C) No, because each firm could easily produce more than 500 kilos.

D) No, because marginal costs are not equated for all firms.

E) It is not possible to say whether this industry is productively efficient because we do not know the market price of the product.