Author Question: In the short run, if a perfectly competitive firm produced at the quantity of productive efficiency, ... (Read 55 times)

rayancarla1 · **on:** Jun 30, 2018

In the short run, if a perfectly competitive firm produced at the quantity of productive efficiency, would it generate the highest profit level possible? Why or why not?

Question 2

According to the Ricardian model, the source of comparative advantage is:
a. differences in labor productivity in different countries.
b. differences in foreign trade policies followed by the government of various countries.
c. differences in resource endowments of an economy.
d. differences in the fields of research and development in a country.
e. differences in the taste and preferences of the consumers in different countries.

jointhecircus · **Reply #1 on:** Jun 30, 2018

Answer to Question 1

In the short run, a firm producing with productive efficiency would not necessarily generate the highest level possible. Productive efficiency occurs at the lowest point on the ATC curve which can be found where MC = ATC. However, this is not likely to be the same as the quantity of profit maximization which is found at the point where MC = MR.

Answer to Question 2

a