Figure 9.1 shows the cost structure of a firm in a perfectly competitive market. If the market price is $40 and the firm is currently producing the profit maximizing output level, the firm's profit is:
A. $7,200.
B. $9,000.
C. $27,000.
D. $36,000.
Answer: B
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Entrepreneurs who earn arbitrage profit are able to do so by extracting the total consumer surplus from buyers
Indicate whether the statement is true or false
In the long run, unemployment will be at the natural rate. This implies that
A. there is a one-to-one relationship between unemployment and inflation and consequently, the Phillips curve is vertical. B. there is no relationship between unemployment and inflation and consequently, the Phillips curve is vertical. C. there is a positive relationship between unemployment and inflation and consequently, the Phillips curve is upward-sloping. D. there is a negative relationship between unemployment and inflation and consequently, the Phillips curve is downward-sloping.
The U.S. dollar is backed by ____________.
Fill in the blank(s) with the appropriate word(s).
The fact that output gaps will not last indefinitely, but will be closed by rising or falling inflation is the economy's:
A. income-expenditure multiplier. B. self-correcting property. C. short-run equilibrium property. D. long-run equilibrium property.