Which of the following is always TRUE in the short run for a perfectly competitive firm that is maximizing economic profits?
A) P = d = MR = MC = AVC
B) P = d = MR = MC
C) P = d = MR = Q
D) MR = MC = Q
Answer: B
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A house is a private good because it is nonrival and nonexcludable
Indicate whether the statement is true or false
Exhibit 4-3 Supply and demand curves
In Exhibit 4-3, an increase in quantity supplied would cause a movement from which equilibrium point to another, other things being equal?
A. E1 to E2. B. E1 to E4. C. E4 to E1. D. E3 to E4.
Suppose there was a debate regarding how to spend $1 billion in newly found revenues in the budget. Suppose the centrist Democrat suggests an increase to infrastructure spending. Suppose the centrist Republican suggests an increase in cyber-defense spending. The Democrat says that the extra infrastructure spending will decrease travel times and be the most valuable. The Republican is arguing that, on average, cyber-security is worth the money, so more is better. What is going on here?
A. Neither are using marginal analysis. B. Only the Democrat is using marginal analysis. C. Only the Republican is using marginal analysis. D. Both are employing marginal analysis, just from different perspectives.
Starting from long-run equilibrium, an increase in autonomous investment results in ________ output in the short run and ________ output in the long run.
A. lower; potential B. higher; higher C. lower; higher D. higher; potential