If All Firms Are Profit Maximizers,then the Following Is Assured

question 41

Multiple Choice

If all firms are profit maximizers,then the following is assured:

• A)each firm is productively efficient.
• B)that the economy reaches the production possibilities boundary.
• C)allocative and productive efficiency.
• D)allocative efficiency.
• E)that firms attain the lowest possible average costs.

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Definitions:

Real Interest Rate

The interest rate adjusted for inflation, representing the true cost of borrowing or the true return on savings.

Anticipated Inflation

The rate of inflation that consumers and firms expect in the future, often based on past inflation rates and current economic conditions.

Price Level

A measure of the average prices of goods and services in an economy, reflecting the purchasing power of money and the inflation rate.

Inflation Rate

How quickly the overall price level for goods and services climbs, resulting in lower purchasing capability.