The smallest quantity of output at which long-run average cost is at a minimum is a firm's ________________.

efficient output point
maximum efficient scale
minimum efficient scale
profit-maximizing output point

In perfect competition, a firm maximizes its economic profit if it produces the output at which ___________________.

price equals marginal cost
economic profit equals zero in the short run
total revenue equals total cost
price equals average cost

Charlie's Chimps is a firm that produces cuddly chimps for children. The market price of a chimp is $10, and Charlie's produces 100 chimps at a marginal cost of $11 a chimp. Charlie's _________________.

will maximize its profit if it produces fewer than 100 chimps
will maximize its profit if it raises the price to $11 a chimp
is maximizing its profit
will maximize its profit if it produces more than 100 chimps

The short-run industry supply curve ________________________.

is horizontal at the price at which firms will shut down
shows the total revenue at each possible market price
shows the marginal revenue at each possible market price
is vertical at the quantity at which firms will shut down

If firms in a competitive industry are making ______________ then there is __________ for firms to _________ the industry.

positive economic profits; an incentive; enter
zero economic profits; an incentive; exit
economic losses; no incentive; exit
normal profits; an incentive; enter

Today, firms in a perfectly competitive industry are making an economic profit. In the long run, firms will ________ the industry until all firms in the industry are _______.

enter; making zero economic profit
exit; producing at the minimum point on their long-run average cost curve
exit; covering only their total fixed costs
enter; making zero normal profit

In a competitive market, the market demand curve measures the ____________ if ______ exist and the market supply curve measures the ______________ if ______________ exist.

marginal social benefit; no external benefits; marginal social cost; no external costs
firms' marginal benefit; external benefits; consumers' marginal cost; external costs
consumers' marginal benefit; external benefits; firms' marginal cost; external costs
marginal social benefit; no external costs; marginal social cost; no external benefits

When the price equals the consumers' marginal benefit and the producers' marginal cost, the gains from trade are __________________.

maximized
less than when price is greater than consumers' marginal benefit
zero
minimized

A competitive market in which firms pollute the environment the quantity produced will be ____________ and the market will ___________.

too large; not achieve efficiency
the profit-maximizing quantity; achieve efficiency
be greater than the profit-maximizing quantity; achieve efficiency
too small; not achieve efficiency

Consumer surplus __________________________.

plus producer surplus equals the gains from trade
is maximized when the market outcome is efficient
equals total revenue minus marginal cost
equals total revenue minus opportunity cost

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