If at its current production level, a perfectly competitive firm's marginal revenue and long-run marginal cost are equal to $5 and its long-run average cost is $4, which of the following statements is true?
A) The firm should expect the market price of its product to increase.
B) The firm should expect the market price of its product to fall.
C) The firm should expect to earn positive economic profit indefinitely.
D) The firm should expect the market supply curve to decrease.
B) The firm should expect the market price of its product to fall.
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Higher efficiency in the economy can be reached if prices are held low by law.
Answer the following statement true (T) or false (F)
Looking at the globalized AS/AD model, the economy can exceed potential output, without generating accelerating goods inflation, because:
A. the domestic price level always exceeds the world price level. B. the world price level always exceeds the domestic price level. C. the world price level puts a cap on the domestic price level. D. the LRAS curve is no longer vertical.
The measure of money most closely correlated with the price level and economic activity is:
A. M1. B. L. C. M2. D. M3.
"Effective demand" represents which of the following?
A) money demand B) demand for exports C) domestic demand D) the demand for labor E) aggregate demand