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

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

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

price equals average cost
economic profit equals zero in the short run
total revenue equals total cost
price equals marginal 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 raises the price to $11 a chimp
will maximize its profit if it produces more than 100 chimps
will maximize its profit if it produces fewer than 100 chimps
is maximizing its profit

The short-run industry supply curve ________________________.

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

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

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

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

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

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

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

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

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

Consumer surplus __________________________.

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

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