In the Absence of Market Failures, Allocative Efficiency Is Achieved

question 66

Multiple Choice

In the absence of market failures, allocative efficiency is achieved in a perfectly competitive industry because

• A) firms do not need to maximize profits.
• B) the industry produces a level of output such that there are increasing returns to scale.
• C) the industry produces a level of output such that the marginal cost to producers equals the marginal benefit to consumers.
• D) there are barriers to entry.
• E) the industry produces a level of output such that the marginal cost of production is minimized.

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Definitions:

Mammals

The class of vertebrates characterized by hair, mammary glands, a diaphragm, and differentiation of teeth.

DNA Sequences

The order of nucleotides in a DNA molecule, determining genetic information and characteristics of living organisms.

Gorilla

A large, primarily herbivorous ape native to the forests of central Sub-Saharan Africa and one of the closest living relatives to humans.

Humans

Homo sapiens, the species of bipedal primates to which all modern human beings belong, characterized by advanced brain development, and capabilities for complex language and culture.