Suppose Tim's Cowboy boot factory produces in a perfectly competitive market. Suppose the average total cost of cowboy boots is $65, the average variable cost of cowboy boots is $60, and the price of cowboy boots is $62. If the firm is producing the level of output where marginal cost equals price, then in the short run the firm:
A. should shut down.
B. should continue to produce since total revenue exceeds total variable cost.
C. is earning a positive economic profit.
D. can increase profit by increasing output.
Answer: B
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If $1 was equivalent to 120 Japanese yen in 2008 and 125 Japanese yen in 2010, it implies in 2010, there was:
a. a depreciation of the dollar against the yen. b. a depreciation of the yen against the dollar. c. an appreciation of the yen against the dollar. d. no change in the value of yen, but the dollar had weakened. e. no change in the value of dollar, but the yen had strengthened.
Entry into a competitive market will continue until
A) economic profits are zero. B) normal profits are zero. C) when accounting losses are zero. D) a. and b. are true
A decrease in the price of baseball bats will decrease the demand for baseballs
a. True b. False Indicate whether the statement is true or false
In the simple circular-flow diagram, with households and firms, GDP can be computed a. as the total payments for factors of production made by households
b. as the total expenditures by households on goods but not services, since services are intangible. c. as the total expenditures by households on goods and services. d. as the total expenditures by households on goods and services, less taxes paid.