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.

Understand the concept of "Tax-Freedom Day" and its implications.

Identify the significance of tax rates and taxable income in personal finance.

Analyze the fiscal role of government lotteries.

Recognize the role of taxes and finance at the local and state levels.

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Definitions:

Long-lived Assets

Assets expected to provide economic benefits over a period longer than one year, such as buildings, machinery, and equipment.

Capitalizes Expenditures

The process of recording a cost as an asset, rather than an expense, to be written off over the future period.

Rate-of-Return Comparisons

A method of evaluating the profitability of different investments by comparing their rates of return.

Operating Cycles

The period of time it takes for a business to purchase or create inventory, sell the products, and collect cash from the sales.