Refer to the graph shown. If the market price is $4, a perfectly competitive firm:
A. earns a profit.
B. incurs a loss but can still cover its variable costs and some of its fixed costs.
C. incurs a loss and cannot cover its variable costs.
D. breaks even.
Answer: B
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When providing a good involves assembling several parcels of contiguous land, private individuals may encounter difficulty negotiating the purchase of those parcels
Indicate whether the statement is true or false
If a firm goes bankrupt, the bondholders will get paid back before the stockholders get any money.
Answer the following statement true (T) or false (F)
Firm managers should use inputs at levels where the:
A. Value marginal product of labor equals wage. B. Marginal benefit equals marginal cost and value marginal product of labor equals wage. C. Marginal benefit equals marginal cost. D. Price equals marginal product.
Competition results in the efficient product mix because
A) producers are setting MRT equal to minus the price ratio while consumers are setting MRS equal to minus the price ratio ensuring that MRT will equal MRS. B) consumers are on the contract curve. C) the slope of the production possibility frontier will equal the slope of the contract curve. D) the distribution of the final output is Pareto efficient.