Question

Is it possible for a perfectly competitive firm to be maximizing profits, but not achieving resource...

Is it possible for a perfectly competitive firm to be maximizing profits, but not achieving resource allocative efficiency?

Homework Answers

Answer #1

it is not possible for a perfectly competitive firm to be maximizing profits, but not achieving resource allocative efficiency because resource allocative efficiency occurs at the point where price and marginal cost are equal to each other and in the perfect competition at the point of profit maximization the marginal cost is equal to the marginal revenue and price. so it is not possible for the firm to achieve maximized profit but not to achieve resource allocative efficiency.

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
If a perfectly competitive firm and a monopolistic competitive firm face the same demand and cost...
If a perfectly competitive firm and a monopolistic competitive firm face the same demand and cost curves, then Group of answer choices neither the perfectly competitive firm nor the monopolistic competitive firm will attain resource-allocative efficiency. both the perfectly competitive firm and the monopolistic competitive firm will attain resource-allocative efficiency. the perfectly competitive firm will attain resource-allocative efficiency, but the monopolistic competitive firm may or may not, depending upon the demand for its product. the perfectly competitive firm will not...
For a perfectly competitive firm, profit maximization does not conflict with resource allocative efficiency. Do you...
For a perfectly competitive firm, profit maximization does not conflict with resource allocative efficiency. Do you agree? Explain your answer.
Explain why abnormal profits earned and losses incurred by perfectly competitive, profit-maximizing firms cannot be present...
Explain why abnormal profits earned and losses incurred by perfectly competitive, profit-maximizing firms cannot be present at long-run equilibrium.
A firm in a perfectly competitive market is making profits. a. is this the short run...
A firm in a perfectly competitive market is making profits. a. is this the short run or the long run? b. what is likely to happen in the market and to this firm as time goes by?
Suppose that a paper market is perfectly competitive. A profit-maximizing competitive firm in this market has...
Suppose that a paper market is perfectly competitive. A profit-maximizing competitive firm in this market has marginal cost of $5, profit of $100 and 50 units of paper. (a) Compute total revenue and total cost (10 points). (b) Suppose that the firm has variable cost of $50. Compute the average variable cost and fixed cost.
Complete the following sentence. In the short run, a perfectly competitive profit maximizing firm that has...
Complete the following sentence. In the short run, a perfectly competitive profit maximizing firm that has not shut down when the price of the product is between
Is it possible that a firm should shut down even though it is maximizing profits?  Explain.
Is it possible that a firm should shut down even though it is maximizing profits?  Explain.
A profit-maximizing firm in a perfectly competitive market that is facing a price of $10 decides...
A profit-maximizing firm in a perfectly competitive market that is facing a price of $10 decides to produce 100 widgets. This results in an economic profit of $80. If the marginal cost of producing the 100th widget was $12 then this firm should: produce less than 100 set the price at $12 produce more than 100 continue producing 100 Which of the following is true for the firm in a perfectly competitive industry? There are no pricing decisions to be...
Ronny's Pizza House is a profit maximizing firm in a perfectly competitive local restaurant market, and...
Ronny's Pizza House is a profit maximizing firm in a perfectly competitive local restaurant market, and their optimal output is 80 pizzas per day. The local gov imposes a new tax of $250 per year on all restaurants operating in the city. How does this affect Ronny's profit maximizing decisions? A. No impact B. Ronny's will remain in business but will produce less pizza C. Ronny's will shut down D. Ronny's decision depends on circumstances - if their profits are...
Fully explain why a perfectly competitive firm will maximize its profits by producing a level of...
Fully explain why a perfectly competitive firm will maximize its profits by producing a level of output where MR = MC.
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT