The term allocative efficiency refers to
a. the level of output where MC = AVC
b. the equality between MR and MC
c. the production of those goods and services most valued by consumers
d. the point where marginal revenue equals average total cost
e. the production of a good up to the point where AFC = 0
QUESTION 2A monopolistically competitive firm can raise price somewhat due to
a. product differentiation
b. barriers to entry
c. product similarity
d. its homogeneous product
e. high tariffs
QUESTION 3As imports rose in 13 major industries studied by Shepherd, these U.S. producers, finding themselves at a cost and quality disadvantage relative to imported goods, initially responded by
a. improving technology
b. exiting the industry
c. seeking trade barriers
d. asking that quotas and tariffs be removed
e. raising prices to recoup their losses
QUESTION 4The term productive efficiency refers to
a. any short-run equilibrium position of the competitive firm
b. the production of all goods and services that consumers need
c. the production of a good at the lowest long-run average cost
d. the equality between average total and average variable cost
e. satisfying the condition that MR = MC
QUESTION 5If Family Travel Agency, a monopolistic competitor, offers services that are differentiated from the services of other producers in the industry, it
a. faces a perfectly elastic demand curve
b. is a price taker
c. has some power to control the price it charges
d. faces a perfectly inelastic demand curve
e. produces a product with no close substitutes
QUESTION 6According to Shepherd, the percentage of industries that were effectively competitive in 1988 is approximately
a. 25 percent
b. 50 percent
c. 64 percent
d. 77 percent
e. 89 percent
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