To maximize profit, a firm will produce the level of output where MR = MC. If a firm actually makes a profit depends on the relationship of price to average total cost
What are the three possible relationships between price and average total cost that determine if a firm will make a profit, experience a loss, or break even?
If P > ATC, the firm makes a profit.
If P < ATC, the firm experiences a loss.
If P = ATC, the firm breaks even.
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What is economic profit?
What will be an ideal response?
In the American Tobacco and Standard Oil cases, the Supreme Court
A. prohibited monopoly per se. B. prohibited certain illegal tactics. C. applied the rule of reason. D. had the government take over the oil and tobacco industries.
Which of the following is an example of natural monopoly?
A. a market for cable TV services B. a market for breakfast cereals C. a market for cold medicines D. a market for cigarettes
Selling a good abroad below the price charged in the home market is
A) a basic argument for free trade. B) the infant industry argument. C) dumping. D) a voluntary restraint agreement.