Question: In a perfectly competitive market, each firm maximizes its profit by choosing only the quantity to produce. Regardless of whether the firm makes an economic profit or incurs an economic loss, the short-run equilibrium is efficient.
This statement is ___.
A. false. The firm chooses both the price and the quantity to produce.
B. true. The firm is a price taker so it chooses only the quantity to produce. A competitive market is efficient in the short run but it is not efficient in the long run
C. true. The firm is a price taker so it chooses only the quantity to produce. The market is efficient because at the short-run equilibrium, marginal social benefit equals marginal social cost
D. false. The market is efficient only in the long run because it is only in the long run that economic profit equals zero