Consider Three Firms,A,B and C,all Producing Kilos of Potatoes (Per

question 22

Multiple Choice

Consider three firms,A,B and C,all producing kilos of potatoes (per year) in a perfectly competitive market.The diagrams below show marginal cost curves for each of the three firms. FIGURE 12-1
-Refer to Figure 12-1.Suppose each of Firms A,B,and C are producing 500 kilos of potatoes.Which of the following statements correctly describes the productive efficiency of this industry?

• A)Productive efficiency would be achieved if Firm B produced all the output,since it has the lowest MC for the production of 500 kilos.
• B)It is possible to reduce the total cost of the given output by reallocating production among the three firms.
• C)The total output of 1500 kilos is the productively efficient output for this industry,so no reallocation is necessary.
• D)It is not possible to say whether this industry is productively efficient because we do not know the market price of the product.
• E)It is not possible to say whether this industry is productively efficient because we do not know the average costs for each firm.

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Definitions:

Double-blind Procedure

A research method in which neither the participants nor the experimenters know who is receiving a particular treatment, to prevent bias.

Experimenter Bias

Experimenter bias is a form of bias that occurs when a researcher's expectations or preferences about the outcome of a study influence the results.

Placebo Control Group

A group of participants in a study who receive a sham treatment, allowing for the comparison of the actual intervention’s effectiveness.

Socially Desirable

Pertains to behaviors or responses that are seen as favorable by society and are thus more likely to be expressed by individuals.