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Author Question: Why are perfectly competitive markets considered efficient? What will be an ideal ... (Read 53 times)

gbarreiro

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on: Jun 29, 2018
Why are perfectly competitive markets considered efficient?
 
  What will be an ideal response?

Question 2

Which of the following items is not a factor of production?
 
  A. An oil rig in the Gulf of Mexico
  B. A ski jump in Utah
  C. A bank loan to a farmer
  D. An orange grove in Florida


jliusyl

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Reply #1 on: Jun 29, 2018
Answer to Question 1

Perfectly competitive markets are forced to be efficient by free entry and exit. Competitive firms produce at the minimum point on their average cost curve, produce where price equals marginal cost, and have zero economic profits.

Answer to Question 2

C Answer C is not a factor of production because it is financial capital; see page 35.


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