Some Economists Have Argued That Competitive Price-Searcher Industries Are Allocatively

question 206

Multiple Choice

Some economists have argued that competitive price-searcher industries are allocatively inefficient relative to price-taker industries because

• A) unlike price takers, price searchers fail to produce at the point where marginal revenue is equal to marginal cost.
• B) competition forces price takers to find the most efficient method of production, whereas product differentiation allows competitive price searchers to stay in business even when their methods of production are inefficient.
• C) unlike price takers, price searchers do not produce at the minimum of their average total cost curves.
• D) price searchers need to pay higher salaries to their managers because of the greater amount of entrepreneurship required in price-searcher industries.

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Definitions:

Top Marginal

Refers to the highest tax rate applied to the last dollar of taxable income in a progressive tax system.

Federal Income Tax Rate

The percentage of an individual's or corporation's income that is paid to the federal government, which varies based on income level and filing status.

Progressive

Favoring or implementing social reform or new, liberal ideas.

Agriculture Subsidies

Government payments to farmers to supplement their income, manage the supply of agricultural commodities, and influence the cost and supply of such goods.