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35) We can safely say that each point on a country's production possibilities boundary (PPB) is A) allocatively efficient. B) one at which P = MC for all goods. C) productively efficient. D) Pareto optimal. E) not productively efficient.

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12 Feb 2018
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Related questions

An economy produces only agricultural products (x) and manufactured goods (y). A quarter of the land in the country is arid and not suitable for agricultural products. Therefore, if half of the arid land is not used at all:

(a) The economy could be productively efficient when the opportunity cost of x (agricultural products) is infinite;

(b) The economy could be productively efficient when the opportunity cost of y (manufactured goods) is zero;

(c) The economy could be productively inefficient with infinite opportunity cost for the production of x (agricultural products);

(d) The economy could be productively inefficient with infinite opportunity cost for the production of y (manufactured goods).

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. Firm A Firm B Finn C Cost (S) Quantity Cost (S) Cost (5) MCB o o - N - N 200 200 500 700 Quantity of potatoes 500 800 900 Quantity of potatoes 500 800 Quantity of potatoes FIGURE 12-1 30) Refer to Figure 12-1. Suppose each of Firms A, B, and Care producing 500 kilos of potatoes. Is this industry productively efficient? A) No, because the marginal cost curve for each firm has a different slope. B) Yes, because output is equated for all firms. C) No, because each firm could easily produce more than 500 kilos. D) No, because marginal costs are not equated for all firms. E) It is not possible to say whether this industry is productively efficient because we do not know the market price of the product.

35) An economy will be allocatively efficient if A) the economy's resources are fully employed. B) all firms are breaking even. C) the average cost of production is the lowest possible for all goods produced. D) price equals marginal cost for all products. E) the price equals average cost for all goods.

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