« previous next »

Author Question: Comment on the following statement: When there are no externalities present, the level of output for ... (Read 76 times)

Capo

  • Hero Member
  • *****
  • Posts: 545
on: Jun 29, 2018
Comment on the following statement: When there are no externalities present, the level of output for a private good produced by a perfectly competitive firm is efficient.
 
  What will be an ideal response?

Question 2

Why might two Fortune 500 companies borrow the same amount of money for the same term at the same time yet both pay a very different interest rate even when the same banks makes both loans?
 
  What will be an ideal response?


parker125

  • Sr. Member
  • ****
  • Posts: 332
Reply #1 on: Jun 29, 2018
Answer to Question 1

The statement is true. Perfectly competitive firms produce where price is equal to marginal cost. If no externalities are present, the price of the product measures the full benefits to society of an additional unit of output, and the marginal cost measures the full costs to society of an additional unit of output. Thus, output is produced up to the point where the additional value from producing another unit the good is equal to the additional cost of producing another unit of the good.

Answer to Question 2

The reasons that interest rates are different have to do with many other factors than the ones mentioned. Most notably the credit-worthiness of the firm will play a role and the expected ability of the firm to be able to satisfactorily pay back the loan.


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
« previous next »
 

Did you know?

Signs and symptoms of a drug overdose include losing consciousness, fever or sweating, breathing problems, abnormal pulse, and changes in skin color.

Did you know?

No drugs are available to relieve parathyroid disease. Parathyroid disease is caused by a parathyroid tumor, and it needs to be removed by surgery.

Did you know?

Anesthesia awareness is a potentially disturbing adverse effect wherein patients who have been paralyzed with muscle relaxants may awaken. They may be aware of their surroundings but unable to communicate or move. Neurologic monitoring equipment that helps to more closely check the patient's anesthesia stages is now available to avoid the occurrence of anesthesia awareness.

Did you know?

Before a vaccine is licensed in the USA, the Food and Drug Administration (FDA) reviews it for safety and effectiveness. The CDC then reviews all studies again, as well as the American Academy of Pediatrics and the American Academy of Family Physicians. Every lot of vaccine is tested before administration to the public, and the FDA regularly inspects vaccine manufacturers' facilities.

Did you know?

Amphetamine poisoning can cause intravascular coagulation, circulatory collapse, rhabdomyolysis, ischemic colitis, acute psychosis, hyperthermia, respiratory distress syndrome, and pericarditis.

The energy input and output of glycolysis. The energy input and output of glycolysis.
Examples of Basic-Level, Subordinate, and Superordinate Concepts Examples of Basic-Level, Subordinate, and Superordinate Concepts
Reaction 7: The First Substrate-Level Phosphorylation Reaction 7: The First Substrate-Level Phosphorylation
U.S. Output and Productivity Growth, 1870–2007 U.S. Output and Productivity Growth, 1870–2007
Factors that Increase Cardiac Output Factors that Increase Cardiac Output
Calculator Output Calculator Output
Video: Role of ATP in muscle movement

For a complete list of videos, visit our video library