In Perfect Competition, When Firms Are Maximizing Profits and Households

question 16

Multiple Choice

In perfect competition, when firms are maximizing profits and households are maximizing utility,

• A) Pareto optimality has been obtained.
• B) voluntary exchange can be used to make both firms and households better off.
• C) the outcome is inefficient.
• D) individual welfare is maximized, but social welfare is not.

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Definitions:

Distributive Property

A property that allows one to multiply a sum by a number by multiplying each addend individually by the number.

Algebra

A field within mathematics that focuses on the use of symbols and the principles governing their manipulation, serving as a foundational basis for nearly the entirety of mathematical disciplines.

Terms

The individual elements or components of an expression, separated by plus or minus signs.

Equal

Signifying mathematical equivalency or equality between two expressions or entitites.