1. We know the firm is a price taker because: a. its MC curve slopes upward. b. its ATC curve is U-shaped. c. its MR curve is horizontal. d. MC and ATC are equal at the profit-maximizing output. 2. At this firm’s profit-maximizing output: a. total revenue equals total cost. b. it is earning an economic profit. c. allocative, but not necessarily productive, efficiency is achieved. d. productive, but not necessarily allocative, efficiency is achieved. 3. The equality of P, MC, and minimum ATC: a. occurs only in constant-cost industries. b. encourages entry of new firms. c. means that the “right goods” are being produced in the “right ways.” d. results in a zero accounting profit. 4. When P = MC = lowest ATC for individual firms, in the market: a. consumer surplus necessarily exceeds producer surplus. b. consumer surplus plus producer surplus is at a maximum. c. producer surplus necessarily exceeds consumer surplus. d. supply and demand are identical.
1. We know the firm is a price taker because: a. its MC curve slopes upward. b. its
3. The equality of P, MC, and minimum ATC: a. occurs only in constant-cost industries. b. encourages entry of new firms. c. means that the “right goods” are being produced in the “right ways.” d. results in a zero accounting profit. 4. When P = MC = lowest ATC for individual firms, in the market: a.
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