Resource Allocative Efficiency Exists for a Perfectly Competitive Firm Because

question 94

Multiple Choice

Resource allocative efficiency exists for a perfectly competitive firm because

• A)price equals marginal revenue and the firm equates marginal revenue and marginal cost to maximize profits.
• B)price equals average total cost and the firm equates marginal revenue and average total cost to maximize profits.
• C)price is greater than marginal revenue and the firm equates marginal revenue with average total cost to maximize profits.
• D)price is less than marginal revenue and the firm equates marginal cost and marginal revenue to maximize profits.

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Definitions:

Total Revenues

the total amount of money received by a company for goods sold or services provided during a specific time period.

Families' Budgets

Families' budgets refer to the financial plans for household income and expenditure, outlining planned earnings and spending over a specific period to manage finances effectively.

Luxury Good

A product or service that is not necessary for survival but is considered highly desirable within a culture or society, often associated with wealth or high social status.

Price Elastic

Price elastic describes how the quantity demanded of a good or service changes in response to a change in its price.