A purely competitive firm is in short-run equilibrium and its MC exceeds its ATC. It can be concluded that:
A. this is an increasing-cost industry.
B. the firm is realizing a loss.
C. the firm is realizing an economic profit.
D. firms will leave the industry in the long run.
Answer: C
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A monopolist charges $7 per unit for selling 6 units of his product. To sell 7 units, he reduces price to $6.5 per unit. The marginal revenue (net addition to revenue) from selling the seventh unit is then $3.5
Indicate whether the statement is true or false
If an economy produces 3,000 units of output with a price level of $2 and with a velocity of money of 12, we know that the money supply must be: A. $1,000. B. $500. C. $2,000. D. $4,000.
A. $1,000. B. $500. C. $2,000. D. $4,000.
Unemployment compensation payments
a. rise during a recession and thereby help stimulate consumption. b. rise during a recession and thereby retard consumption. c. rise during economic expansion and thereby help stimulate consumption. d. rise during economic expansion and thereby retard consumption.
Taxes are costly to market participants because they
a. transfer resources from market participants to the government. b. alter incentives. c. distort market outcomes. d. All of the above are correct.