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Economists assume that the goal of the firm is to maximize total revenue. ( )

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A profit maximizing competitive firm should produce at the point where marginal cost is lowest. ( )

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A competitive firm’s short-run supply curve is its marginal cost curve above its average variable cost curve. ( )

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When the government levies a tax on a good equal to the external cost associated with the good’s production, it _ the price paid by consumers and makes the market outcome _ efficient. ( )

A. increases, more
B. increases, less
C. decreases, more
D. decreases, less

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The free-rider problem ( )

A. forces supply of a public good to exceed demand.
B. allows more people to pay for the public good than if it were a private good.
C. encourages overuse of a good that is freely available.
D. holds the equilibrium quantity of a public good below the economically efficient level.

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Economists assume that the goal of the firm is to maximize total revenue. ( )

A profit maximizing competitive firm should produce at the point where marginal cost is lowest. ( )

A competitive firm’s short-run supply curve is its marginal cost curve above its average variable cost curve. ( )

When the government levies a tax on a good equal to the external cost associated with the good’s production, it ___________ the price paid by consumers and makes the market outcome ___________ efficient. ( )

The free-rider problem ( )

When the government levies a tax on a good equal to the external cost associated with the good’s production, it _ the price paid by consumers and makes the market outcome _ efficient. ( )