If a firm in a perfectly competitive market faces the cost curves in the graph shown and produces at the profit-maximizing level of output, which of the following is true? A firm will:

A. make positive profits any time the price is greater than $15.
B. lose money and shut down in the short run if price falls below $15.
C. lose money, but continue to operate in the short run if price is at least $15.
D. All of these are true.


Answer: A

Economics

You might also like to view...

Local governments wanting to keep their tax base from eroding away should choose _____

a. income taxes b. sales taxes c. property taxes d. excise taxes

Economics

When the 2010 Patient Protection and Affordable Care Act is fully implemented, it will

a. substantially reduce the share of health care expenses paid by a third party. b. require all Americans to purchase health care insurance from either a private or government source. c. increase the competitiveness of the health insurance business by allowing people to purchase the insurance across state boundaries. d. reduce the demand for health care and thereby lead to lower prices for health care services.

Economics

Suppose a U.S. government program subsidizes the production of domestic sugar producers and places a tariff (tax) on the importation of sugar from other countries. This program

A) helps the producers of sugar, but increase the opportunity cost of obtaining it. B) will reduce the opportunity cost of obtaining sugar and therefore lead to lower sugar prices. C) creates wealth, because the government is providing the subsidies and imposing the tariffs. D) promotes the production of goods that consumers value highly relative to cost.

Economics

The optimal hiring rule is to employ labor up to the point where:

A. wage = MFC. B. wage = MP. C. wage = MR D. wage = MRP

Economics