Consider Three Firms,A,B and C,all Producing Kilos of Potatoes (Per

question 57

Multiple Choice

Consider three firms,A,B and C,all producing kilos of potatoes (per year) in a perfectly competitive market.The diagrams below show marginal cost curves for each of the three firms. FIGURE 12-1
-Refer to Figure 12-1.Suppose each of Firms A,B,and C are producing 500 kilos of potatoes.Is this industry allocatively efficient?

• A)It is not possible to say whether this industry is allocatively efficient because we do not know the market price for kilos of potatoes.
• B)It is not possible to say whether this industry is allocatively efficient because we do not know the average costs for each firm.
• C)Yes,because output is equated for all firms.
• D)No,since marginal costs are not equated for all firms,the industry is not productively efficient,and thus cannot be allocatively efficient.
• E)No,because the marginal cost curve for each firm has a different slope.

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Act of taking air into the lungs; inhalation.

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The process of oxygen and carbon dioxide moving between the bloodstream and the lungs in animals, and the atmosphere and cells in plants.

Diffusion

The process by which molecules spread from areas of high concentration to areas of low concentration, often leading to equilibrium.

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The process by which molecules of a solvent pass through a semipermeable membrane from a less concentrated solution into a more concentrated one.