If a Purely Competitive Firm Is Producing Where Price Exceeds

question 64

Multiple Choice

If a purely competitive firm is producing where price exceeds marginal cost, then

• A)the firm will fail to maximize profit, but resources will be efficiently allocated.
• B)the firm will fail to maximize profit and resources will be overallocated to the product.
• C)the firm will fail to maximize profit and resources will be underallocated to the product.
• D)resources will be underallocated to the product, but the firm will maximize profit.

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Definitions:

Payee

A person who receives a payment.

Third-Party Check

A check made out to one recipient and given in payment to another, as with one made out to a patient rather than the medical practice.

Health Insurance Company

A firm that offers plans and policies that cover the costs of medical care, including treatments, surgeries, and sometimes prescription drugs.

Drawer

A sliding storage compartment that is part of a piece of furniture such as a cabinet or desk.