If a profit-maximizing firm in a perfectly competitive market is currently producing the output where (price - average variable cost) = average fixed cost, the firm is:

A. making a positive economic profit.
B. making a zero economic profit.
C. suffering an economic loss.
D. None of these


Answer: B

Economics

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A perfectly competitive firm maximizes its profit by producing at the point where

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An industry where the capital-labor ratio is relatively high is characterized as

A. capital intensive. B. labor intensive. C. income intensive. D. market intensive.

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According to Chandler (1977), the major event in business development in 1895–1904 was

(a) the Granger cases. (b) Munn v Illinois (1877). (c) the rise of vertically integrated firms. (d) the merger wave.

Economics

Suppose that a tariff is imposed on imported cheese. This will have the effect of __________ the price of cheese, __________ consumers' surplus, and __________ producers' surplus

A) increasing; increasing; increasing B) decreasing; decreasing; decreasing C) increasing; increasing; decreasing D) increasing; decreasing; increasing E) decreasing; decreasing; increasing

Economics