Suppose a perfectly competitive cotton farmer can produce 10 containers of cotton at an output at which marginal cost equals marginal revenue. The price per container of cotton is $100 and the average total cost is $75. What is the profit or loss that
this cotton farmer is earning?
A) $750
B) $150
C) $250
D) -$25
Answer: C
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If an individual is indifferent about being an entrepreneur or not:
A) his losses from entrepreneurship is likely to be equal to his opportunity cost of entrepreneurshi
In the long run, perfectly competitive firms cannot earn an economic profit
Indicate whether the statement is true or false
The Stogie Shop, a cigar store in the mall, sells hand-rolled cigars for $10.00 and machine-made cigars for $2.50 each. What is the opportunity cost of buying a hand-rolled cigar?
A) $10.00 B) 4 machine-made cigars C) $2.50 D) one-quarter of a machine-made cigar
A monopolistically competitive firm that earns economic profits in the short run will face a more elastic demand curve in the long run
Indicate whether the statement is true or false